- According to a Wall Street Journal report, crypto exchange FTX is in talks to buy a stake in BlockFi.
- Earlier this week, BlockFi received a $250 million loan from FTX, indicating the company is in need of funds.
- FTX and related companies have made other investments and acquisitions over the past several months.
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Popular cryptocurrency exchange FTX may soon buy a stake in lending firm BlockFi wall street journalAle
FTX in talks with BlockFi
FTX and BlockFi are reportedly discussing the possibility of the former firm buying a stake in the latter.
Insiders say that talks are on between the two companies. No final decision has been made and the amount under discussion has not been disclosed.
BlockFi received a $250 million loan from FTX earlier this week. BlockFi CEO Zac Prince said the loan will strengthen the firm’s balance sheet and the strength of the platform.
Despite Prince’s positive stance on the deal, BlockFi’s decision to take out the loan points to financial issues. Also, the firm liquidated its position at Three Arrows Capital (3AC) and cut 20% of its workforce this month.
Those events have collectively stirred up rumors of low liquidity in BlockFi. Therefore, a possible decision to buy a stake in FTX could provide BlockFi with much-needed funding.
FTX is investing in other firms
FTX founder and CEO Sam Bankman-Fried has taken interest in several other cryptocurrency companies.
Alameda Research, headed by Bankman-Fried, has acquired a stake in Canadian crypto brokerage Voyager Digital.
Additionally, Alameda provided Voyager $200 million in cash and a line of credit of 15,000 BTC this month. It appears those funds are intended to help Voyager recover from a failed deal with Three Arrows Capital (3AC), to which it lent that amount. Voyager claims that 3AC owed it $667 million.
In other deals this year, Bankman-Fried invested in Robinhood, acquiring a 7.6% stake for $648.3 million. FTX acquired Bitvo this month, while FTX.US acquired Embed Financial.
FTX appears to be in a strong position. CoinGecko ranks FTX as the second largest fully trusted exchange with a trading volume of $2 billion in the last 24 hours.
Disclosure: At the time of writing, the author of this article owns BTC, ETH and other cryptocurrencies.