According to Blockfi co-founder Zac Prince, the company has signed a definitive agreement with crypto firm FTX and the deal is now up to shareholders for approval. The deal is worth a total of $680 million, but Prince also noted that $240 million of that amount could be used to acquire Blockfi at a variable price up to that amount.
FTX could buy Blockfi for $240 million, and CEO Zac Prince said the company lost $80 million from 3AC Exposure
Zac Prince, co-founder of Zac Prince, co-founder of Blockfiexplained that the company has reached an agreement with Sam Bankman-Fried’s crypto company FTX. The deal is intended to “protect customer funds” and still requires shareholder approval. Princedisclosed that part of the arrangement is a “$400 million (million) revolving line of credit subordinated to all client funds”. In addition, Blockfi’s CEO added that FTX has “an option to acquire Blockfi for a variable price of up to $240 million based on performance triggers.”
Prince detailed that Blockfi has not yet drawn on its line of credit and that the company hasincreased the interest rate on the Blockfi Interest Account (BIA) by.” Blockfi interest rates have increasedon BTC, ETHrates are increasing; USDC, GUSD, PAX, BUSD, and. USDTincreases across all rate tiers,” the company’s rate increase announcement states.Blockfi’s executive went on to explain what has put the company in its current predicament While Blockfi had zero exposure to Celsius, Prince noted that the freeze on Celsius withdrawals has caused a “significant increase in customer withdrawals” on Blockfi’s platform. platform “significantly increased customer withdrawals.”
As for 3AC, Blockfi had exposure to the crypto hedge fund, which recently filed for Chapter 15 bankruptcy. He said, “As the 3AC news spread more fear in the market… We were one of the first to fully accelerate our overcollateralized loan to 3AC and liquidate and hedge all collateral,” remarks Prince. Blockfi lost $80 million, which is a fraction of the losses reported by other companies,” Blockfi’s CEO added,
This is the full extent of 3AC’s impact on Blockfi. There is no further exposure, the limited losses incurred will be absorbed by Blockfi, and there will be no impact on customer funds.
clients, not customers” – Blockfi was presented with “a variety of unattractive options that would reduce client funds”
Princesaid the firm’s 3AC loss would be part of the hedge fund’s “ongoing bankruptcy case(s),” and Brockfi executives noted that more information about these proceedings would come out when that happens.” As a reminder, Prince added, “Our risk framework combines counterparty credit analysis, collateral haircuts, and portfolio limits based on stress testing, with zero customer funds in the (decentralized finance) protocol.
At the end of Prince’s Twitter thread on the final agreement with FTX, the CEO said that Blockfi’s main goal has always been focused on protecting customer funds. Prince further noted that it is important for Blockfi to strengthen the company’s balance sheet.
Princerevealed that “we were presented with various unattractive alternatives, such as customer funds being haircut or being positioned behind the lender in the capital stack,”and explained how Blockfi receivedPrinceexplained how Blockfi received various offers from other companies, saying, “These options were totally unacceptable. These options were totally unacceptable to me, [Flori Marquez], and our Board of Directors, and were contrary to our core value of ‘clients, not customers,’ as well as the interests of Blockfi and our shareholders,” Prince concluded.
What do you think of the Blockfi CEO’s Twitter thread about FTX giving the company a line of credit and possibly acquiring Blockfi for $240 million? Let us know what you think about this subject in the comments section below.
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