FTX Is Nearing A Deal To Acquire Troubled BlockFi As

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  • FTX plans to buy a stake in BlockFi after previously extending an emergency line of credit.
  • No final agreement has been reached between the two entities but there is a high possibility that the deal would sail through.
  • FTX’s founder continues to spread his tentacles throughout the industry despite the bearish sentiments.

Beleaguered BlockFi could cede a part of itself to FTX if negotiations between the two firms are successfully completed. The agreement would see Sam Bankman-Fried’s trading empire steadily increase its reach after going on a lending spree.

FTX braves the winter to strike a new deal

According to a report by the Wall Street Journal, crypto exchange FTX is negotiating a deal with BlockFi to buy a part of the company. The discussions are still hanging in the balance with no figures made public yet.

“We are still negotiating the terms of the deal and cannot share more information at this time,” said a BlockFi spokesperson. “We anticipate sharing more on the terms of the deal with the public at a later date.”

The talks of acquisition are coming just days after FTX extended a line of credit to BlockFi worth $250 million. The revolving credit facility was earmarked to bolster the platform’s balance sheet and platform strength.

BlockFi has been hit hard by the recent carnage in the crypto markets. Last week, the firm’s CEO announced that an institutional client of the firm had “failed to meet its obligations on an over collateralized loan”. BlockFi was part of crypto companies that reduced the sizes of their workforce with BlockFi still reeling from a $100 million settlement that it paid to the SEC for the sale of unregistered securities.

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BlockFi is valued at $1 billion at the moment which is a decline from the valuation of $3 billion it attained last year. There were reports that the firm’s valuation could reach $5 billion if it raised an additional $500 million with rumors of the firm going public. The recent travails faced by the firm will no doubt have an impact on the amount FTX is willing to pay for a piece of the pie.

Sam Bankman-Fried makes major moves

FTX CEO Sam Bankman-Fried has assumed the role of the white knight for crypto firms in troubled waters. His quantitative trading firm Alameda Research extended a credit facility worth $200 million cash and 15,000 BTC to Voyager Digital. The facilities bear an annual interest rate of 5% and will expire on the last day of 2024.

“Today’s action gives Voyager more flexibility to mitigate current market conditions and strengthen our relationship with one of the industry leaders,” said Stephen Ehrlich, Voyager CEO. This is not the first time both firms will be crossing paths because, in May, Alameda Research led a $60 million private placement offering for Voyager Digital.

Bankman-Fried justified his decision to bail out troubled firms in the industry as a noble cause. “Even if we weren’t the ones who caused it, or weren’t involved in it. I think that’s what’s healthy for the ecosystem, and I want to do what can help it grow and thrive,” he said.

The crypto billionaire has previously donated to political campaigns and claims that he could spend up to $1 billion in political donations in the 2024 elections.