- The crypto exchange FTX grants BlockFi a credit line of $ 250 million.
- BlockFi is considered to be severely affected by the current crisis.
- The loan is intended to serve the company as a bridging aid.
FTX will grant the lending platform BlockFi a credit line in the amount of $ 250 million. The measure can be confidently described as a rescue package, because BlockFi is also severely affected by the current crisis.
In February, the SEC agreed to pay $ 100 million because the U.S. Financial Market Authority believed that parts of the business were operating without authorization. Investors can deposit their assets with BlockFi and earn interest or alternatively borrow money by depositing their crypto assets as collateral. Since then, US citizens and persons with permanent residence in the USA have been excluded from the BlockFi Interest Accounts offer.
Two weeks ago, BlockFi announced that it would have to part with about 20% of the staff. The wave of layoffs affects not only BlockFi, but also other well-known companies and is directly related to the crisis first triggered by Terra and then continued with Celsius.
FTX rushes to BlockFi’s aid
Thus, the second major “CeFi-Lender” is saved. According to a statement by CEO Zac Prince, the company primarily wants to fulfill all obligations to customers and subordinate claims from the granted loan to service. A reinsurance that was perhaps also intended to prevent a bank run on BlockFi.
Since Celsius has frozen all customer accounts, investors are likely to wonder whether their money is in good hands with competitor BlockFi. Not only does the reputation of the company suffer due to the collapse of the competitor, but the whole business model threatens to overturn. After all, there is still a risk that other parts of the industry will be infected. Due to the fact that the lenders, which move between the world of CeFi and DeFi, do not operate completely transparently, uncertainties cannot be ruled out.
The credit line thus gives the company valuable time and can better bridge any defaults. It should also play a role in whether and how low the prices fall this year. On the other hand, for FTX, the loan marks the beginning of a possible partnership with BlockFi, which could become more permanent and more profound in the future.