The crypto lender Blockfi detailed on Tuesday that the company secured a $250 million line of credit from FTX. Blockfi’s CEO Zac Prince announced on Twitter that the company will use the capital to bolster Blockfi’s “balance sheet and platform strength.”
Blockfi Obtains $250 Million Revolving Credit Line From FTX After Crypto Lending Firms Struggle With 2022’s Market Volatility
It’s been a rough year for crypto lenders due to digital assets losing significant value over the last few months. One lender, Celsius, has been accused of being insolvent and last week it paused withdrawals.
In 2021, U.S. securities regulators from various states sent cease and desist orders to Celsius and the crypto lender Blockfi. In February 2022, the U.S. Securities and Exchange Commission (SEC) charged Blockfi for failing to register its retail crypto lending products.
During the second week of June, Blockfi co-founders Zac Prince and Flori Marquez announced the company would lay off “roughly 20%” of its staff due to “market conditions” that had a “negative impact” on the company.
On June 16, Prince discussed “speculation about BlockFi’s risk management practices,” and the Blockfi CEO stressed that the company always enforces “prudent and proactive risk management.”
Prince revealed on Tuesday that Blockfi has secured a $250 million line of credit from FTX. “Today Blockfi signed a term sheet with FTX to secure a $250M revolving credit facility providing us with access to capital that further bolsters our balance sheet and platform strength,” the Blockfi CEO said.
“The proceeds of the credit facility are intended to be contractually subordinate to all client balances across all account types (BIA, BPY & loan collateral) and will be used as needed,” Prince continued in his Twitter thread.
The Blockfi CEO added that during the crypto market volatility, he was proud of the company’s risk management protocols and he further said that the agreement with FTX “unlocks future [collaborations]” with the crypto company.
Meanwhile, since Celsius paused withdrawals, the crypto lending company updated the community in a newly published blog post. “We want our community to know that our objective continues to be stabilizing our liquidity and operations. This process will take time,” the Celsius blog post details.
What do you think about the current state of crypto lending firms? What do you think about Blockfi securing $250 million from FTX? Let us know what you think about this subject in the comments section below.