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BlockFi has confirmed that FTX.US will buy the company for up to $240 million

BlockFi will be acquired by FTX.US for up to $240 million. BlockFi will also receive a $400 million credit facility from FTX.US.

BlockFi CEO Zac Prince posted a lengthy Twitter thread on Friday revealing that FTX.US would buy the company for up to $240 million based on some “performance triggers“. Zac Prince added that BlockFi would receive a $400 million revolving credit facility. The $240 million price tag marks a steep reduction from BlockFi’s previous valuation. The company was valued at $4.8 billion after raising funds in a private funding round in July 2021.

News of the $680 million deal comes after a tough June for BlockFi. Zac Prince said that the “cryptocurrency market volatility” had had a negative impact on BlockFi in the run-up to the transaction. Although he cited the insolvency issues of Celsius and Three Arrows Capital, he clarified that BlockFi has no exposure to any of these companies. According to him, the impact of the sudden collapse of Three Arrows led to a wave of withdrawals as customers lost faith in lending services, triggering BlockFi’s own insolvency crisis. On June 16, it was revealed that BlockFi was one of several companies to liquidate Three Arrows after it failed to meet a margin call when the market crashed. Zac Prince said the downfall of Three Arrows had “sowed fear” on the market, before revealing that BlockFi had suffered losses of $ 80 million in this case.

Zac Prince added that while the companies agreed to a $680 million deal, BlockFi did not use the line of credit. He went on to explain how the company engages in risk management practices and that it “fundamentally believes in protecting customer funds.“Protecting customers was a key reason for adding capital to the company’s balance sheet.

Like BlockFi, cryptocurrency lender Celsius also faced insolvency issues in June, but opted to freeze customer withdrawals instead. The corporate crisis is still ongoing. Other cryptocurrency lenders, such as Babel Finance and CoinFLEX, have also faced insolvency issues in recent weeks amid extreme market turbulence.

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