Crypto lender BlockFi secured a $250 million revolving line of credit from crypto exchange FTX, CEO Zac Prince announced Tuesday morning. Twitter.
“Today @BlockFi signed a term sheet with @FTX_Official to secure a $250m revolving credit facility giving us access to capital that further strengthens our balance sheet and the strength of our platform,” said he wrote in a Twitter thread.
Prince said FTX loan proceeds are contractually subordinate to all customer balances, which means BlockFi will fulfill its obligations on customer accounts — BlockFi interest accounts, BlockFi personalized return, and loan collateral — before paying FTX. .
The company was particularly affected by the crisis. Last week, BlockFi joined the growing list of companies cutting staff to weather the crypto winter, cutting its staff by “about 20%.”
At the time, Prince said on Twitter that all BlockFi products and services would continue to operate as normal.
This is a timely disclaimer.
Celsius, one of BlockFi’s crypto lending competitors, froze withdrawals, trades, and account transfers last Sunday to help it cope with “extreme market conditions.” Yesterday the company said it needed more time to stabilize before unfreezing accounts.
Meanwhile, BlockFi has encountered its own headwinds. Last week, the company made a $1 million payment to the Iowa Division of Insurance as part of a larger $100 million penalty that BlockFi agreed to pay to settle an investigation into its high yield accounts.
In his announcement of the line of credit, Prince hinted that this could open the door for a partnership between FTX and BlockFi.
“This deal also unlocks future collaboration and innovation between BlockFi and FTX as we work to accelerate prosperity around the world through crypto financial services,” he said on Twitter.
The feeling seems mutual. Yesterday, Sam Bankman-Fried FTX CEO said the cryptocurrency exchange had a “responsibility” to bail out struggling businesses during this relentless bear market.
“Even though we weren’t the ones who caused it, or weren’t involved in it,” he said, referring to the wave of “contagion” affecting the crypto markets. “I think that’s what’s healthy for the ecosystem, and I want to do what can help it grow and thrive.”