Crypto Exchange FTX Is in Talks to Acquire a Stake in BlockFi: Report

Cryptocurrency exchange FTX is in talks to acquire a stake in crypto lender BlockFi, the Wall Street Journal reported, citing people familiar with the matter.

The companies had previously announced on Tuesday that BlockFi had signed a term sheet with FTX for a $250 million (roughly Rs. 1,955 crore) revolving credit facility, which will give BlockFi crucial access to capital amid a rout in the digital currency market.

No equity agreement has yet been reached, and discussions are ongoing, according to a recent report from the Wall Street Journal.

In a statement, a BlockFi spokesperson said the company "does not comment on market rumours."

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

A spokesperson for FTX did not immediately respond to a request for comment.

Last week, BlockFi said it was reducing its headcount by about 20 percent, in addition to implementing other cost-cutting measures like reducing marketing spending and executive compensation.

Aggressive rate hikes by the US Federal Reserve and recession fears have led to a turmoil in equities and sparked a sell-off in cryptocurrencies. Last weekend, the world's biggest cryptocurrency, Bitcoin, dropped below the key $20,000 (nearly Rs. 15.6 lakh) level for the first time since December 2020.

In his previous announcement, BlockFi's Chief Executive Officer, Zac Prince mentioned on Twitter that the company has signed a termed sheet with FTX to secure a revolving credit facility. Prince confirmed in a subsequent tweet that the amount secured from FTX will be used to ensure liquidity for users who are depositing funds into the project.

BlockFi's CEO goes on to mention that the newly acquired credit facility is essential in keeping the company's operational efficiency intact amidst the massive downturn in the broader crypto ecosystem. He proposed that the loan will provide the company with access to capital that will further bolster its balance sheet and its overall platform strength.

© Thomson Reuters 2022