Cryptocurrency lender BlockFi has temporarily secured a $250 million revolving credit facility from FTX with access to more capital as it seeks to increase liquidity and keep fellow lender Celsius cool.
CEO Zack Prince confirmed the signing of a non-binding term sheet with FTX to strengthen its balance sheet and make its platform more resilient amid current market volatility.
The lending platform, notorious for disputes with securities regulators at the state and federal level in the United States, has so far weathered the crypto winter storm without significant disruptions for customers. Prince appreciates the efforts of the company’s risk management protocol, team and platform twitter thread In safeguarding user funds on Tuesday, even competitor Celsius faced tough questions after halting withdrawals for its 1.7 million customers. A press release confirmed that all funds from the line of credit are subject to client balances in all types of BlockFi accounts.
FTX CEO commends elimination of counterparty risk
The CEO has also indicated that this could be the first step towards greater collaboration with crypto exchange FTX. FTX CEO Sam Banksman-Fried commends BlockFi’s risk policies and management twitter thread, highlighting how the Company acted conclusively and retrospectively to liquidate the positions of Three Arrows Capital and other counterparties that the lender failed to meet margin calls. Genesis, another company in the crypto financial services space, also terminated the position of Three Arrows. Neither Prince nor Bankman-Fried discussed the interest rate of the new credit line.
BlockFi Struggling to Raise $100 Million
After failing to raise $100 million at a valuation of $1 billion, BlockFi made a move to secure lending, sparking fears that it might go down the same route as Celsius, which recently ended its financial crisis. Hired insolvency experts to resolve and have not yet supplied a date. To resume withdrawals, swaps and exchanges. New Jersey-based BlockFi denied Any form of collaboration between the two companies and Singapore-based Three Arrows Capital’s recent woes allayed fears of staking ETH, a derivative token at the center. BlockFi previously raised $350 million in March 2021 at a valuation of $3 billion.
The signed term sheet to secure a credit line from FTX relies on binding documents yet to be produced by both companies.
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