In a Twitter post, the CEO of the decentralized finance money lending platform, BlockFi, Zac Prince, announced, somewhat surprisingly, that his company had secured a $250 million line of credit from cryptocurrency exchange FTX.
The deal will help BlockFi
Today @BlockFi signed a term sheet with @FTX_Official to secure a $250M revolving credit facility providing us with access to capital that further bolsters our balance sheet and platform strength.
— Zac Prince (@BlockFiZac) June 21, 2022
The deal will allow BlockFi to access capital at a time when, according to some experts, its financial situation was becoming very complicated.
Last week, the company said it was reducing its workforce by around 20%, as well as implementing other cost-cutting measures such as reducing marketing expenses and executive pay.
Trouble for the digital asset lending platform had begun last February, when it settled a dispute with the SEC by paying a $100 million maxi penalty.
The collapse of the cryptocurrency market then generated a liquidity crisis for the company, which may now find relief from this new settlement.
The market is questioning BlockFi’s financial strength also because of the decision by rival company Celsius to block withdrawals last week due to liquidity difficulties.
Some rumours had suggested that BlockFi might also be in a similar situation to its rival.
The opening of this credit line could now avert the danger of an imminent liquidity crisis.
In a tweet, FTX founder and CEO Sam Bankman-Fried stated that the credit line granted will allow BlockFi to “navigate the market from a position of strength”.
1) Today we’re injecting $250m into BlockFi and partnering with them so they can navigate the market from a position of strength.https://t.co/nocsdi0GLF
— SBF (@SBF_FTX) June 21, 2022
In his announcement of the credit line obtained by the exchange, Prince also hinted, not too veiledly, that this fact could open the door to a future partnership between the two companies.
“This agreement also unlocks future collaboration and innovation between BlockFi & FTX as we work to accelerate prosperity worldwide through crypto financial services”
he said on Twitter.
FTX last March opened FTX Europe, based in Switzerland, to expand its business to Europe and the Middle East.
The exchange is growing by about 40% per year in volume and transactions and is becoming one of the leading centralized exchanges on the market.
This is also thanks to a precise marketing strategy, which in recent months has led the great American football champion Tom Brady and his partner Gisele Bündchen to embrace FTX as testimonials.