FTX and Ledn Bid for Cash-Strapped Crypto Lender BlockFi: Reports

Diving brief:

  • FTX, one of the biggest crypto exchanges, is in talks to buy struggling crypto lender BlockFi for as low as $25 million, 99% below BlockFi’s most recent valuation, CNBC reported on Thursday.
  • The potential deal was reported less than two weeks after FTX extended a $250 million revolving credit facility to BlockFi. This came after BlockFi liquidated a “large client who defaulted on an oversized margin loan,” BlockFi CEO Zac Prince said. tweeted.
  • But another lending platform reportedly stepped in to offer BlockFi an alternative deal; Ledn offers to raise up to $400 million in a funding round and provide $50 million in equity in exchange for a significant stake in the business, according to Bloomberg.

Overview of the dive:

FTX, the second-ranked Bahamian crypto exchange by CoinMarketCap, is reaching a deal to acquire BlockFi, which CNBC says is expected to close by the end of the week, citing three sources.

Beyond its most recent financial hurdles, BlockFi has had its share of regulatory issues this year. In February, the company agreed to pay $100 million in penalties to the Securities and Exchange Commission (SEC) and 32 states over allegations that its interest-bearing account proceeds were non-registered securities.

And with the prices of many digital assets plummeting, this crypto winter has proven to be a tough one for BlockFi. CNBC reported last month that the company laid off 20% of its workforce.

A few days later, BlockFi announced that it had liquidated an unnamed “large client,” which CoinDesk claimed was crypto venture capital and trading fund Three Arrows.

In the fallout, Bankman-Fried offered BlockFi a $250 million emergency line of credit to help the lender “navigate the market from a position of strength,” he said. said in a tweet.

Now CNBC is reporting that FTX is looking to fully acquire the troubled lender. FTX is expected to pay between $25 million and $50 million for BlockFi – a steep discount from its last valuation of $4.8 billion.

The acquisition may not close for months, the outlet reported, with a source adding, “There was more than one deal on the table.”

Now a new competitor has emerged in Ledn. The Canadian company is reportedly offering an alternative deal that would allow BlockFi to remain a separate entity.

“Given its operational strength, Ledn is currently evaluating a number of opportunities to expand its leadership in digital asset lending and beyond,” Ledn CEO Adam Reeds told Bloomberg in a statement. “At this time, we cannot share any additional details.”

Prince took to Twitter to downplay reports of the potential deals, calling them “deal rumours.”

“I can 100% confirm that we are not sold for $25 million,” he said. tweeted Thursday.

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