FTX, a cryptocurrency derivatives exchange based in the Bahamas, is purportedly in the process of closing a deal to purchase BlockFi, a source has revealed. At a cost of $25 million, BlockFi will be acquired for less than a tenth of its most recent value.
According to people with knowledge of the issue, CNBC is reporting that FTX is likely to purchase the falling crypto lender, which was valued at roughly $5 billion in its previous Series E investment in July of 2021.
Both companies refused to comment when approached about the problem, with the BlockFi spokesperson remarking that the business does not comment on “market speculations.”
To refresh your memory, FTX has recently indicated an interest in BlockFi’s wealth management and trading business by providing an emergency $250 million line of credit to help BlockFi “navigate the market from a position of strength.”
According to rumors, FTX’s desire to acquire a share in BlockFi led to the $250 million credit line. In exchange for $250 million, FTX received a 25 percent stake in BlockFi’s stock, the source said.
BlockFi is one of the few companies in the crypto sector that has taken a significant impact as a consequence of the market circumstances caused by the seemingly endless crypto winter.
As CEO Zac Prince stated in a tweet on June 13th, the crypto lending behemoth has had to reduce its employees by 20%. According to Prince, the company’s growth rate has been badly affected by the drastic change in macroeconomic circumstances, much like many other IT businesses.
By cutting market expenditure, removing non-critical suppliers, and decreasing executive remuneration for Flori and myself and other executives as well as by slowing staff growth and reducing the size of our team we have been on the route to profitability,” stated Prince.
Early this month, it was reported that the previously $4.8 billion-valued business was attempting to obtain capital that would bring the company to a $1 billion valuation