Crypto exchange FTX bails out BlockFi with a $250M revolving credit as fear of insolvency spreads to crypto lenders | Tech News | Startups News

Startup News:

Crypto tech startup BlockFi confirmed today it has signed a $250 million revolving credit facility agreement with Crypto exchange FTX following last week’s reports that the company was exposed to the carnage at crypto hedge fund Three Arrows Capital.

In a post on Twitter, BlockFi CEO Zac Prince said the agreement will give BlockFi access to capital as fear of insolvency spreads to crypto lenders amid a rout in the crypto market.

“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,” Prince tweeted.

In a tweet thread, Prince also added:

“The proceeds of the credit facility are intended to be contractually subordinate to all client balances across all account types (BIA, BPY & loan collateral) and will be used as needed.

Throughout the market volatility of the last several weeks, I’m incredibly proud of how our team, platform and risk management protocols have performed. Today’s landmark announcement reinforces BlockFi’s commitment to serving its clients and ensuring their funds are safeguarded.

This agreement also unlocks future collaboration and innovation between BlockFi & FTX as we work to accelerate prosperity worldwide through crypto financial services. This is a significant step forward in our commitment to the strength and accessibility of crypto markets.

To @BlockFi clients:

We are here for you. Our team is battle tested and has weathered many storms over the years, which only makes us stronger and more resilient as we navigate today’s market environment.

We look forward to sharing more details about future plans and initiatives to support the industry shortly!”

BlockFi has had a difficult year. In February, BlockFi was fined $100 million for its high-yield interest accounts, which were deemed as security products by the United States Securities and Exchange Commission.

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As we reported last week, BlockFi said it was reducing its headcount by about 20% following multiple reports of complaints that customers can’t withdraw their funds due to BlockFi’s exposure to Three Arrows Capital. BlockFi also said that it’s implementing other cost-cutting measures like reducing marketing spending and executive compensation to help the company weather the ongoing crypto market storm.

Founded in 2017 by Zac Prince and Flori Marquez, BlockFi is a provider of cryptocurrency-focused financial products, including zero-fee trading and interest-bearing accounts. The company started lending in January 2018, the company offers the ability to leverage Bitcoin and Ether to obtain USD loans.

BlockFi operates in over 44 U.S. states and is backed by leading investors including Galaxy Digital Ventures LLC, ConsenSys Ventures, and SoFi. BlockFi is a secured non-bank lender that offers USD loans to crypto-asset owners who collateralize the loan with their crypto-assets. Our products bring additional liquidity to the blockchain asset sector and meet the needs of both individuals and institutions holding blockchain assets.

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