Cryptocurrency exchange and digital wallet service provider BlockFi has announced that it had been loaned $250 million (roughly Rs. 1,955 crore) by leading crypto derivatives exchange FTX. BlockFi’s Chief Executive Officer, Zac Prince announced on Twitter recently that the company has signed a termed sheet with FTX to secure a revolving credit facility. Prince confirmed in a subsequent tweet that the amount secured from FTX will be used to ensure liquidity for users who are depositing funds into the project.
BlockFi’s CEO goes on to mention that the newly acquired credit facility is essential in keeping the company’s operational efficiency intact amidst the massive downturn in the broader crypto ecosystem. He proposed that the loan will provide the company with access to capital that will further bolster its balance sheet and its overall platform strength.
The proceeds of the credit facility are intended to be contractually subordinate to all client balances across all account types (BIA, BPY & loan collateral) and will be used as needed.
— Zac Prince (@BlockFiZac) June 21, 2022
Prince also states that the proceeds of the credit facility are “intended to be contractually subordinate to all client balances” which means that BlockFi will satisfy its obligations on client accounts — BlockFi Interest Accounts, BlockFi Personalised Yield and loan collateral — before repaying FTX.
The company has been especially hard hit in the downturn. Last week BlockFi joined the growing list of firms reducing their workforce to weather the crypto winter, cutting its staff by roughly 20 percent.
This agreement also unlocks future collaboration and innovation between BlockFi & FTX as we work to accelerate prosperity worldwide through crypto financial services. This is a significant step forward in our commitment to the strength and accessibility of crypto markets.
— Zac Prince (@BlockFiZac) June 21, 2022
Despite the layoffs, Zac heaped accolades on the company’s staff for staying at the top of their games while managing clients’, investors’ funds.
“Throughout the market volatility of the last several weeks, I’m incredibly proud of how our team, platform, and risk management protocols have performed. Today’s landmark announcement reinforces BlockFi’s commitment to serving its clients and ensuring their funds are safeguarded,” he said.
Zac also affirmed that moving forward, the newly secured loan will bridge the gap between BlockFi and FTX, thus unlocking a whole lot more collaborations in the near future.