- BlockFi receives credit facility from FTX
- Funds will be used to fulfill client balances
Cryptocurrency lender BlockFi has secured a $250 million revolving credit facility from FTX exchange, the company’s CEO Zac Prince announced.
“Today BlockFi signed a term sheet with FTX to secure a $250M revolving credit facility providing us with access to capital that further bolsters our balance sheet and platform strength,” Prince said.
He said the proceeds of the credit facility are intended to be contractually subordinated to all client balances across all account types, which means, that BlockFi will satisfy its obligations towards all client accounts - BlockFi Interest Accounts, BlockFi Personalized Yield, and loan collateral - before paying FTX.
BlockFi hit by bear market
BlockFi is one of the major crypto firms impacted by bearish crypto market sentiments.
Last week, the company, which has around 850 people on its roster, announced slashing its headcount by around 20%.
BlockFi fined $100m by SEC
The company also paid $1m to the Iowa Insurance Division as part of a larger $100 million penalty that BlockFi agreed to pay to settle an investigation by the Securities and Exchange Commission (SEC) and other agencies into its high-yield accounts.
The lender was ordered to stop opening new accounts of its high-yield lending product to most Americans as part of the settlement.
FTX CEO hails risk management of BlockFi
Meanwhile, FTX CEO Sam Bankman-Fried said funds have been injected into BlockFi so they can navigate the market from a position of strength.
He added that BlockFi has “careful risk management and great leadership” and that they successfully removed at-risk counterparties preemptively.
“BlockFi customer assets are appropriately managed, with no debt/risk from 3AC, Celsius, etc,” Bankman-Fried said.
Notably, BlockFi, without revealing names, had last week announced that it had liquidated a large client that “failed to meet its obligations on an overcollateralized loan.”
In a move that had rattled the markets, crypto lending platform Celsius, a competitor of BlockFi, had on June 20 paused withdrawals over what they labeled "extreme market conditions."
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