BlockFi, a сrypto lender and exchange, has secured a $250 million credit from leading crypto platform FTX. While many crypto platforms are struggling amid a bear market, BlockFi hopes the new credit line could help them remain afloat. The agreement also opens the door to future collaboration between BlockFi and FTX.
BlockFi CEO Zac Prince announced the news on Twitter, explaining that the credit facility funding strengthens the company’s balance sheet. The announcement comes three days after The New York Post reported that BlockFi failed to raise capital while providing a steep discount on its valuation, raising concerns in the crypto industry.
“The proceeds of the credit facility are intended to be contractually subordinated to all client balances across all account types (BIA, BPY & loan collateral) and will be used as needed,” Prince said.
Also, he lauded the efforts of his team during the ongoing volatility in the crypto market and stated that the new line of credit will be put toward safeguarding users’ funds across all accounts type.
The agreement also opens the door to future collaboration between BlockFi and FTX.
On Thursday, BlockFi also stated that a significant client had failed to meet its obligations on a margin loan. Although the client’s name was not disclosed, the BockFi was among the entities that liquidated at least some of their positions with Three Arrows Capital, the Financial Times reported.
The crypto lender was already having a hard time as it recently lay-off its workforce by 20%. Zac Prince and Flori Marquez, BlockFi founders, said in a blog post that “market conditions that have had a negative impact on our growth rate” drove their decision to make the job cuts.
In February, BlockFi was fined $100 million this year for its high-yield interest accounts, which were deemed as security products by the United States Securities and Exchange Commission.