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BlockFi agrees to sell itself to FTX

The crypto lender has secured a $400 million credit facility from FTX. The sale could net it $240 million.

The BlockFi website on a laptop computer.

BlockFi CEO Zac Prince said the company was affected by crypto volatility and other companies' decisions to stop customer withdrawals.

Photo: Gabby Jones/Bloomberg via Getty Images

BlockFi CEO Zac Prince said his company has signed a deal giving FTX the option to buy the crypto lender for up to $240 million as part of a credit financing agreement.

BlockFi has secured a $400 million credit facility from FTX, which would also have the option to acquire the company “at a variable price of up to $240M based on performance triggers,” Prince said in a tweet on Friday.

Prince made the announcement a day after denying “market rumors” that FTX would buy the company for $25 million. The deal for a company once valued by its investors at around $5 billion is one more sign of the deepening slump in the crypto market. Cryptocurrencies have shed roughly $2 trillion in the last seven months, and the companies trading and lending against them have seen their value fall as well. BlockFi announced recently that it was slashing 20% of its workforce.

Interlocking financial relationships between crypto companies have contributed to some companies' woes, either directly or indirectly.

“Crypto market volatility, particularly market events related to Celsius and 3AC, had a negative impact on BlockFi,” Prince said.

He said that the news two weeks ago that Celsius was stopping withdrawals, swaps and transfers “started an uptick in client withdrawals from BlockFi’s platform despite us having no exposure to them.”

In its quest for a solution, Prince said BlockFi was “presented with various unattractive options where client funds would take a haircut or be behind a lender in the capital stack,” which he said were “completely unacceptable.”

The FTX deal was “the best path forward for all,” Prince said.

FTX CEO Sam Bankman-Fried didn't comment directly on the deal, but he retweeted a Twitter user who said, "Tinder, but it’s FTX swiping left or right on distressed assets."

Benjamin Pimentel

Benjamin Pimentel ( @benpimentel) covers crypto and fintech from San Francisco. He has reported on many of the biggest tech stories over the past 20 years for the San Francisco Chronicle, Dow Jones MarketWatch and Business Insider, from the dot-com crash, the rise of cloud computing, social networking and AI to the impact of the Great Recession and the COVID crisis on Silicon Valley and beyond. He can be reached at bpimentel@protocol.com or via Google Voice at (925) 307-9342.

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