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BlockFi Signs Term Sheet Securing Credit Line From FTX

2 mins
Updated by Ryan James
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In Brief

  • Crypto lender BlockFi secures $250 million credit line from FTX with access to more capital.
  • The BlockFi CEO floated the idea of easier collaboration between the two companies henceforth.
  • BlockFi struggled to raise $100 million in a recent funding round, necessitating the need for the credit line.
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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.

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David Thomas
David Thomas graduated from the University of Kwa-Zulu Natal in Durban, South Africa, with an Honors degree in electronic engineering. He worked as an engineer for eight years, developing software for industrial processes at South African automation specialist Autotronix (Pty) Ltd., mining control systems for AngloGold Ashanti, and consumer products at Inhep Digital Security, a domestic security company wholly owned by Swedish conglomerate Assa Abloy. He has experience writing software in C,...