BlockFi Bolsters Its Balance Sheet After FTX's Rescue

KEY POINTS

FTX has granted a $250 million revolving credit facility to BlockFi
BlockFi was earlier trying to raise money by giving a steep discount on its valuation
The crypto lender is working to resolve solvency issues

Crypto lender BlockFi's CEO Zac Prince has revealed that the firm has accepted a $250 million revolving credit facility from major crypto exchange FTX. This provides the lender with access to capital that further bolsters its "balance sheet and platform strength."

Today @BlockFi signed a term sheet with @FTX_Official to secure a $250M revolving credit facility providing us with access to capital that further bolsters our balance sheet and platform strength.
— Zac Prince (@BlockFiZac) June 21, 2022

BlockFi is a major crypto lender that allows investors to buy, sell, and trade a variety of crypto assets. The firm had recently laid off 20% of its employees due to economic conditions and a bearish market.

This morning we announced that after taking significant time to plan and consider, we are reducing our headcount by roughly 20%. This is not a decision we take lightly and is one that brings us great sadness.
— Zac Prince (@BlockFiZac) June 13, 2022

Additionally, The New York Post reported that the crypto lender has been struggling to raise money despite being one of the most important crypto firms. BlockFi went as far as to give a steep discount on its valuation to raise money, sources told the media outlet. The firm has been trying for a month to raise $100 million at a valuation of just $1 billion while earlier it was evaluated at $5 billion.

Now that the deal with FTX has been confirmed, the BlockFi CEO claims that future collaboration and innovation between BlockFi and FTX will happen. "This is a significant step forward in our commitment to the strength and accessibility of crypto markets," Prince added.

Interestingly, BlockFi was one of the firms that liquidated the collateral on a loan from Three Arrows Capital (3AC). 3AC borrowed Bitcoin from the crypto lender but failed to meet the margin call.

For the time being, the $250 million revolving credit will keep BlockFi afloat as it continues to resolve solvency issues. Commenting on the development, FTX CEO Sam Bankman-Fried said that partnering with BlockFi will help the exchange "navigate the market from a position of strength."

"Going forward, we’re excited to partner with BlockFi to offer industry leading products," the FTX boss added.

1) Today we’re injecting $250m into BlockFi and partnering with them so they can navigate the market from a position of strength.https://t.co/nocsdi0GLF
— SBF (@SBF_FTX) June 21, 2022

Additionally, BlockFi's financial crunch was further aggravated by the fine of around $1 million imposed by the Iowa Insurance Division as a part of its $100 million settlement deal with the Securities and Exchange Commission and other U.S. jurisdictions.