Rumors have been flying all week that something was happening between the camps of BlockFi and FTX. Well today, July 1, 2022 at 11:11 am, Zac Prince, the CEO of BlockFi announced on Twitter that a deal had been made with FTX!
Back in June of 2021, BlockFi had reported a $5 billion dollar valuation, but since the start of the crypto bear winter, that valuation had dropped and FTX US swooped in and signed an agreement for a total value of $640 million, although he stated $680 million in the thread, let's dive into it a bit and see what's happening.
Agreement Made But Subject To Shareholder Approval
Prince went on to state that as the definitive agreements have been signed, it is still subject to shareholder approval. So it's not set in stone just yet.
In the tweet, he talks about a $400 million revolving credit facility which is subordinate to customer funds, and then the option to acquire BlockFi at a price of $240 million depending on performance triggers. This makes a total of $640 million, so the $40 million dollar difference must be a buffer figure to account for asset performance.
You can see the tweet below:
The Dominos Fell One By One
Celsius news on June 12 shook the core of the already weakened crypto market after the complete collapse of Terra Luna and it's UST stablecoin. 3 Arrows Capital then shortly after was liquidated after being extremely over leveraged in their holdings.
Prince blames the recent volatility in the crypto markets, especially the events that were related to Celsius and 3 Arrows Capital basically all crapping the bed, which had a very negative impact on BlockFi.
He goes on to state in the tweet that after the Celsius event, customers started to quickly withdraw funds from BlockFi. And on top of that, the over-collateralized loan to 3AC, which caused an $80 million dollar hit in the liquidation. 3AC is currently in process of filing for bankruptcy.
No Other Offered Compared To FTX US
Prince goes on to state in his Tweet thread that they were presented with several offers, but hadn't found one that was acceptable until FTX US came along. He states that nothing will change in how you use the BlockFi platform, he even expects FTX to make some incredible enhancements. He feels they have found a great partner in FTX US that shares their values in the space!
What Do You Think?
What do you think about the BlockFI/FTX US merger? Do you think it will have a positive effect on BlockFi's platform, or does this encourage you to use the platform now that it will be under FTX's wing?
For us, our motto still stands, NOT YOUR KEYS NOT YOUR COINS! You have seen with all of the trouble in the CEFI world, that centralized platforms are just as much, if not more of a risk than many of the DEFI protocols out there. At least with DEFI platforms, we own the keys, not the company.
Nothing said is financial advise.
This is for educational and recreational purposes only!
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Posted from my blog with Exxp : https://coin-logic.com/blockfi-announces-deal-with-ftx/