According to Blockfi’s co-founder Zac Prince, the company has signed definitive agreements with the crypto firm FTX and the deal is currently up to shareholder approval. The deal represents a total of $680 million, but Prince also noted that $240 million of that total could be used to acquire Blockfi at a variable price up to that amount.
FTX Could Buy Blockfi for $240 Million, CEO Zac Prince Says Company Lost $80 Million From 3AC Exposure
Zac Prince, the co-founder of Blockfi, explained that his company has come to an agreement with Sam Bankman-Fried’s crypto firm FTX. The deal is meant to “protect client funds” and is still subject to shareholder approval. Prince disclosed that part of the arrangement was a “$400 [million] revolving credit facility which is subordinate to all client funds.” Furthermore, the Blockfi CEO added that FTX has “an option to acquire Blockfi at a variable price of up to $240M based on performance triggers.”
Prince detailed that Blockfi has not drawn on the credit facility yet and the company raised interest rates for its Blockfi Interest Accounts (BIAs). “Blockfi rates are increasing for BTC, ETH, USDC, GUSD, PAX, BUSD, and USDT across all rate tiers,” the company’s rate hike announcement notes. The Blockfi executive continued by explaining what put the company in its current predicament, and he mentioned the crypto lender Celsius and the crypto hedge fund Three Arrows Capital (3AC). While Blockfi had zero exposure to Celsius, Prince said that Celsius freezing withdrawals caused a significant “uptick in client withdrawals” on the Blockfi platform.
As far as 3AC, Blockfi did have exposure to the crypto hedge fund that recently filed for Chapter 15 bankruptcy. “[As] 3AC news spread further fear in the market … we were one of the first to fully accelerate our overcollateralized loan to 3AC, as well as liquidate and hedge all collateral,” Prince remarked. “[Blockfi] did experience ~$80M in losses, which is a fraction of losses reported by others.” The Blockfi CEO added:
This represents the full extent of the impact to Blockfi from 3AC. We have no further exposure and the limited losses we did experience will be absorbed by Blockfi with no impact to client funds.
‘Clients Not Customers’ — Blockfi Was Presented ‘With Various Unattractive Options Where Client Funds Would Take a Haircut’
Prince said that the company’s 3AC losses will be a part of the hedge fund’s “ongoing…
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