Crypto lender BlockFi has provisionally secured a $250 million revolving credit facility from FTX with access to more capital as it attempts to shore up liquidity and keep out the chill plaguing fellow lender Celsius.
CEO Zac Prince confirmed signing a nonbinding term sheet with FTX to bolster its balance sheet and make its platform more resilient amidst the current market volatility.
The lending platform, infamous for spats with securities regulators at the state and federal levels in the United States, has thus far weathered the crypto winter storm without significant disruptions to customers. Prince lauded the efforts of the company’s risk management protocols, team, and platform in a Twitter thread Tuesday in safeguarding user funds, even as competitor Celsius faces tough questions after pausing withdrawals for its 1.7 million customers. A press release confirmed that all funds from the credit line are subordinate to client balances across all types of BlockFi accounts.
FTX CEO lauds elimination of counterparty risk
The CEO has also indicated that this may be the first step toward greater collaboration with the crypto exchange FTX. FTX CEO Sam Bankman-Fried lauded BlockFi’s risk policies and management in a Twitter thread, highlighting how the company acted decisively and preemptively to liquidate the positions of Three Arrows Capital and other counterparties failing to meet lender margin calls. Genesis, another company in the crypto financial services space, also liquidated Three Arrows’ position. Neither Prince nor Bankman-Fried discussed the interest rate of the new credit line.
BlockFi struggles to raise $100M
BlockFi’s move to secure lending comes after it failed to raise $100 million at a valuation of $1 billion, sparking fears that it could go down the same route as Celsius, which recently hired insolvency experts to solve its financial woes and has not yet supplied a date for the resumption withdrawals, swaps, and exchanges. New Jersey-based BlockFi has denied any form of collaboration between the two companies and allayed fears that it holds staked ETH, a derivative token at the heart of Singapore-based Three Arrows Capital’s recent woes. BlockFi had previously raised $350 million at a valuation of $3 billion in March 2021.
The term sheet signed to secure the credit line from FTX is contingent upon binding documents yet to be drafted by both companies.
What do you think about this subject? Write to us and tell us!
Disclaimer
In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content. Please note that our Terms and Conditions, Privacy Policy, and Disclaimers have been updated.
