Crypto Exchange FTX Extends $250 Million Credit Line to Lender BlockFi #Crypto #Exchange #FTX #Extends #Million #Credit #Line #Lender #BlockFi Welcome to Lopoid
Crypto exchange FTX extended a $250 million revolving credit line to crypto lender BlockFi.
BlockFi co-founder and Chief Executive
said via Twitter on Tuesday that the companies had signed a term sheet, “providing us with access to capital that further bolsters our balance sheet and platform strength.”
He said the credit line is “intended to be contractually subordinate to all client balances across all account types.”
Neither FTX nor BlockFi were available for further comment.
BlockFi, founded in 2017 and based in Jersey City, N.J., has raised about $1 billion in venture funding, most recently in January 2022, according to CrunchBase.
Cryptocurrencies rose sharply in the last two years along with other speculative assets, but now many crypto companies have been scrambling to stay afloat in the wake of a crypto selloff that destroyed about $2 trillion in total market value. The price of bitcoin fell as low as $17,602 on Saturday, down more than 70% from its November high, before rising above $21,000 on Tuesday.
In June, Celsius Network LLC abruptly halted withdrawals and hired lawyers for a possible restructuring. An Asian lender named Babel Finance also froze all customer withdrawals and redemptions. BlockFi,
Coinbase Global Inc.
, Gemini Trust Co. and others have recently been forced into layoffs.
On Thursday, Mr. Prince said via Twitter that BlockFi liquidated a client’s overcollateralized margin loan. He didn’t name the client or the size of the loan.
In February, BlockFi paid a $100 million fine to the Securities and Exchange Commission to settle claims that it allowed nearly 600,000 users to earn interest by lending their holdings to other traders in violation of investor-protection laws. It was the largest fine agreed to by a cryptocurrency company. BlockFi also stopped offering the accounts in the U.S.
The announcement of the credit facility comes after FTX founder and Chief Executive
-Fried told National Public Radio that companies such as FTX should help out struggling crypto companies.
“I do feel like we have a responsibility to seriously consider stepping in, even if it is at a loss to ourselves, to stem contagion,” Mr. Bankman-Fried told NPR this weekend.
Earlier this month, Mr. Bankman-Fried’s other crypto company, trading firm Alameda Research, extended two credit lines, one worth $200 million and another for 15,000 bitcoins, to crypto broker and services firm
Voyager Digital Ltd.
Write to Paul Vigna at Paul.Vigna@wsj.com
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