FTX To Acquire BlockFi With A Floor Price Of $15 Million

FTX, the crypto exchange founded and currently led by Sam Bankman-Fried (SBF), is reportedly set to acquire BlockFi, a crypto lending platform. The move is said to be an acquisition deal in the works that's worth roughly $15 million at the minimum.

According to reports, the terms of the acquisition deal are not yet finalized, and at the same time, details are sparse as to the exact nature and implications of the acquisition. Reports indicate that the approval is yet to be determined based on BlockFi's market performance or busines viability. Previously, reports on the matter have indicated an estimate of $25 million for the acquisition to transpire. Earlier statements from BlockFi CEO Zac Prince on Twitter have also detailed how FTX is providing BlockFi a revolving credit facility worth $250 million.

This buyout appears to be a lot less than BlockFi's most recent figures. The firm was placed with a valuation of roughly $3 billion earlier in March after a $350 million investment round. A primary reason for this decline can be attributed to the market conditions triggered by the collapse of Celsius and 3AC (Three Arrows Capital), a recent event which has had a severe impact on many crypto firms either associated with or in direct product competition with the two. Other crypto platforms and protocols such as Voyager, Babel Finance, and CoinFLEX also suffered in the same liquidity crisis.

FTX.US (FTX' U.S. arm), is said to be willing to shell out some $25 million more, on the condition that BlockFi passes some regulatory clearances set by the U.S. Securities and Exchange Commission by December 31st this year. This set of clearances are targeted at the crypto lending firm's Yield, an interest-earning financial product which it has launched recently.

BlockFi was recently heralded as the fastest-growing U.S. firms with a record 245,000% growth, according to ranking data from Inc. 5000. The acquisition deal, which would mean that BlockFi would be bought out at a much lower floor price, will only push through if it fails to meet the requirements set by the SEC. However, FTX's acquisition also means that if BlockFi does perform well (reaching an assets under management total of at least $10 billion) in the coming months running up until October 2023, the SBF-led crypto exchange would extend its acquisition price by another $100 million.

The crypto market has been rife with consolidation activity in recent months, as firms attempt to bulk up on war chests and offer more comprehensive services in the industry. This is in addition to the fact that many crypto companies have been forced to cut down on spending due to the pandemic-induced economic downturn. With this move, FTX is looking to bolster its services and offer more comprehensive crypto products to its users. This also signals a potential shift in the crypto space, as BlockFi has been one of the few crypto firms to have managed to survive and even thrive in the recent market conditions, despite its valuation drastically going down as an effect of the Celsius and 3AC crash.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.