FTX enters into contract with option to purchase BlockFi for up to $240M

FTX has signed a deal with BlockFi that includes an option for the cryptocurrency exchange to buy the lending platform for up to $240 million, as digital asset companies grapple with the fallout from the crypto downturn.

BlockFi CEO Zac Prince said on Twitter on Friday that the agreement included a $400 million revolving credit facility from FTX US as well as a purchase option at a “floating price.” . . based on performance triggers”.

The deal increases the amount of aid to BlockFi from FTX, which provided a $250 million loan to BlockFi last week.

“We have not drawn on this credit facility to date and have continued to operate all of our products and services as normal,” Prince added.

The deal represents a new move by FTX Chief Executive Sam Bankman-Fried to shore up crypto firms weakened by an acute credit crisis gripping crypto markets, which analysts have likened to a "Lehman moment" for the digital asset industry.

Through his companies, the 30-year-old billionaire has also made loans to crypto broker Voyager Digital totaling $485 million in cash and Bitcoin. On Friday, Voyager announced that it was "temporarily suspending trading, deposits, withdrawals and loyalty rewards" starting at 2 p.m. Eastern Time in the US.

Voyager Chief Executive Stephen Ehrlich said the move “gives us additional time to continue to explore strategic alternatives with various interested parties while preserving the value of the Voyager platform.” The company added that it is "actively pursuing all available remedies" to recover more than $650 million it loaned to troubled hedge fund Three Arrows Capital, which was liquidated this week.

On Thursday, CNBC reported that FTX was expected to pay about $25 million for BlockFi, a figure that Prince disputed. The company was valued at $4 billion following a $500 million funding round last summer, according to Crunchbase data.

In his Twitter thread On Friday, Prince said that a move by lending platform Celsius last month to prevent customers from withdrawing their assets led to a "surge in customer withdrawals from the BlockFi platform, even as crypto asset prices fell despite our lack of exposure to them."

He also said the company suffered $80 million in losses due to its involvement with Three Arrows Capital.

Prince said he rejected several other rescue options that would have resulted in client funds taking a haircut, adding: "Fundamentally, we fundamentally believe in protecting client funds."

BlockFi announced plans to lay off a fifth of its workforce earlier this month as many crypto firms cut jobs to weather the downturn in crypto markets. Token prices have fallen by around 70 percent since their peak last fall.