BlockFi found itself in deep financial trouble following reports of multiple complaints that customers could not withdraw their funds due to the company’s exposure to Three Arrows Capital. Last week. the crypto lender received $250 million credit line from crypto exchange FTX as part of the efforts to keep its operations going.
But the revolving credit may not be enough to keep BlockFi stay afloat. Now FTX, a startup founded by crypto billionaire Sam Bankman-Fried, is reportedly in talks to acquire a stake in crypto lender BlockFi, the Wall Street Journal reported, citing people familiar with the matter.
The Wall Street Journal added that no equity agreement has yet been reached, and discussions are still ongoing. In a statement, a BlockFi spokesperson said the company “does not comment on market rumors.”
“We are still negotiating the terms of the deal and cannot share more information at this time. We anticipate sharing more on the terms of the deal with the public at a later date,” the BlockFi spokesperson said.
In recent weeks, Sam Bankman-Fried has become a lender of last resort to the beleaguered crypto industry as fear of insolvency spreads to crypto lenders. His other company, Alameda Research, has also acquired a big ownership stake in Canadian crypto broker Voyager Digital Ltd.
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.
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.