FTX agrees to deal with BlockFi purchase option for up to $240 million

FTX has signed a deal with BlockFi that includes an option for a crypto exchange to buy the lending platform for up to $240 million, as digital asset firms grapple with the fallout from the cryptocurrency decline.

BlockFi CEO Zac Prince said on Twitter Friday that the agreement includes a $400 million revolving credit facility from FTX US, as well as an option to purchase “at a variable rate . . . based on performance triggers.”

The deal increases the amount of assistance provided to BlockFi by FTX, which last week extended a $250 million loan to BlockFi.

“We have not relied on these credit facilities until now and we have continued to operate all our products and services normally,” Prince added.

The deal marks a new step by FTX CEO Sam Bankman-Fried to support crypto firms that have been weakened by a severe credit crunch sweeping the cryptocurrency markets, which analysts have likened to a “Lehman moment” for the digital asset industry.

Through his companies, the 30-year-old billionaire made loans to crypto broker Voyager Digital, totaling $485 million in cash and bitcoin. Voyager announced Friday that it will “temporarily suspend trading, deposits, withdrawals and loyalty rewards” from 2 p.m. ET in the United States. The terms attached to the loan limit the amount Voyager can withdraw in any 30-day period to $75 million.

The move “gives us additional time to continue exploring strategic alternatives with various interested parties while preserving the value of the Voyager platform,” said Voyager CEO Stephen Ehrlich. The company added that it was “actively seeking all available remedies” to recover more than $650 million it provided to troubled hedge fund Three Arrows Capital, which went into liquidation this week.

If BlockFi is acquired by FTX, the deal could potentially value the crypto lender at around $150 million, according to people close to the deal.

On Thursday, CNBC reported that FTX is expected to pay close to $25 million for BlockFi, a figure that Prince denied. The company was valued at $4 billion after a $500 million funding round last summer, according to Crunchbase data.

in Twitter theme On Friday, Prince said that as crypto-asset prices plummeted, last month’s move to lend Celsius platform to prevent clients from withdrawing their assets had “increased client withdrawals from the BlockFi platform despite our lack of exposure.”

He also said that the company suffered losses of $80 million due to its exposure to Three Arrows Capital.

Prince said he has rejected several other rescue options that would have lowered clients’ funds, adding, “In principle, we believe primarily in protecting clients’ funds.”

BlockFi announced plans to lay off a fifth of its staff earlier this month, as several crypto companies cut jobs to weather the downturn in the cryptocurrency markets. Token prices are down about 70 percent from their peak last fall.