The two parties have updated the previous term sheet as FTX will raise its revolving credit facility to $400 million. Additionally, the crypto exchange has the option to acquire BlockFi in the future for up to $240 million.
- The crypto lender has been among the most struggling companies in the industry lately, following the massive market crash. One of the first measures it had to take was to lay off 20% of its staff.
- However, it seems the worst was yet to come as the firm announced receiving a $250 million revolving credit facility from FTX a few weeks later. This type of loan essentially allows the receiver to withdraw money, use it to fund the necessary operations, repay it, and withdraw again if needed.
- Later on, reports emerged that FTX will step up its engagement and actually purchase BlockFi for $25 million – an amount significantly lower than the crypto lender’s announced valuation of over $3 billion as of last year. Nevertheless, BlockFi’s CEO – Zac Prince – denied the amount.
- On Friday, Prince published a company message informing that the two parties have indeed reached an agreement on how to proceed.
- FTX has increased the revolving credit facility from $250 million to $400 million. More importantly, though, the exchange now has the option to acquire BlockFi “at a variable price of up to $240 million based on performance triggers.” However, the release didn’t provide a minimum price.
- BlockFi also said it had not withdrawn any of the funds available in the credit facility. Aside from the market drawback, it also blamed its current situation on Celsius Network and the problematic hedge fund – Three Arrows Capital.
“Crypto market volatility, particularly market events related to Celsius and 3AC, had a negative impact on BlockFi. The Celsius news on June 12th started an uptick in client withdrawals from BlockFi’s platform despite us having no exposure to them.”