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FTX, a Bahamian cryptocurrency derivatives exchange, is reportedly close to finalizing a deal that will enable it to acquire embattled crypto lender BlockFi, a source said. The deal will see BlockFi bought at a price of $25 million – a rate roughly 99% below the company’s most recent valuation.
FTX supported BlockFi with a $250 million credit line earlier
According to CNBC, the crashing crypto lender which was valued at almost $5 billion in its latest Series E funding in July of 2021 is set to be acquired by FTX with the deal coming to a conclusion by the end of the week, per sources with knowledge of the situation.
When asked about the matter, spokespeople from both firms chose not to issue any comments, with the BlockFi representative noting that the company does not make remarks when it comes to “market rumors.”
Recall that FTX had shown interest in the wealth management and trading firm just recently – a week before this, FTX presented an emergency line of credit amounting to $250 million to BlockFi to enable the firm “navigate the market from a position of strength.”
Reports suggest that the $250 million credit line was a product of FTX’s interest in acquiring a stake in BlockFi. According to the source, the $250 million gave FTX a portion of BlockFi equity, with a $25 million balance left to purchase it.
BlockFi is one of the few crypto firms hit by the crypto winter
In what appears to be a turn of unfortunate events, BlockFi is one of the few firms within the crypto space that have been majorly hit by the market conditions resulting from the seemingly incessant crypto winter.
The crypto lending giant has had to trim its workforce by 20% as revealed by founder and CEO Zac Prince in a tweet on 13 June. Prince mentioned that the firm, like many other tech companies, has been greatly hit by the “dramatic shift in macroeconomic conditions”, noting that the aforementioned has impacted their growth rate negatively.
“On the path towards profitability, we have been managing costs throughout our business such as: reducing market spend, eliminating non-critical vendors, reducing executive compensation for myself, Flori, and other execs, slowing headcount growth, and reducing our team size,” added Prince.
The once $4.8 billion-valued firm was reported to have been looking to raise funds that would bring the company to a $1 billion valuation early this month.
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