FTX closes in on a deal to buy embattled crypto lender BlockFi for $25 million in a fire sale

Sam Bankman-Fried, chief govt officer of FTX Cryptocurrency Derivatives Exchange, speaks throughout a House Financial Services Committee listening to in Washington, D.C., U.S., on Wednesday, Dec. 8, 2021.

Stefani Reynolds | Bloomberg | Getty Images

FTX is swooping in to buy crypto lender BlockFi for pennies on the greenback, sources instructed CNBC.

The time period sheet is nearly over the end line and anticipated to be signed by the top of the week, in accordance to one supply, who requested not to be named as a result of the deal discussions had been confidential. FTX can pay roughly $25 million — 99% beneath BlockFi’s final non-public valuation. Jersey City, New Jersey-based BlockFi was final valued at $4.8 billion, in accordance to PitchBook. 

An acquisition may take a number of months to shut, and the worth tag may shift between now and Friday, a supply stated. Friday additionally marks the top of the quarter, which the individual stated was a catalyst for getting a deal signed. The Wall Street Journal first reported that FTX was seeking an fairness stake in the company, whereas the Block reported this week that an outright deal was in the works. 

An FTX spokesperson stated the company “would not be commenting on the matter.” A BlockFi spokesperson stated the company “does not comment on market rumors.”

The fire sale comes a week after FTX supplied a $250 million emergency line of credit score to BlockFi. FTX CEO Sam Bankman-Fried stated on the time that the financing would assist BlockFi “navigate the market from a position of strength.” 

It’s the most recent fallout for crypto lending corporations amid plunging crypto asset costs. Funds have struggled with liquidity points as counterparties fail to meet margin calls. Celsius and CoinFlex paused buyer withdrawals citing “extreme market conditions.” Major cryptocurrency hedge fund Three Arrows Capital has fallen into liquidation, CNBC reported earlier, marking one of many largest casualties of crypto’s bear market.

Another supply stated fairness traders in BlockFi are “wiped out” and are actually writing off the worth of their losses. The individual stated a number of provides had been being thought of, since there was no “shop clause” in the time period sheet. 

“There was more than one deal on the table,” a supply instructed CNBC. 

Billionaire Bankman-Fried has been seen as a lender of final resort in the space. In addition to BlockFi, Bankman-Fried’s company Alameda Research supplied a $500 million mortgage to Voyager.

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