FTX Begins Doling out Credit Lines – BlockFi Secures Revolving $250M to Reinforce Platform Strength
BlockFi, has just secured a revolving line of credit from FTX exchange. With the current state of digital assets, lending platforms should rightfully be worried about their ability to fulfill customer withdrawals in a timely manner. The trouble which continues to plague Celsius Network has appeared to be a wake-up call for some of its competitors, with some like BlockFi seeking out ways to avoid a similar situation while simultaneously putting its clients at ease.
Details of the Line
This newly announced credit line comes in at a reported $250M USD, and is being facilitated by FTX – a world leading digital asset exchange. The credit line is scheduled to be used as a means to ‘bolster' BlockFi's balance sheet and to ensure that services on offer by the lending platform can continue to be trusted. Ideally, this will allow for BlockFi to operate seamlessly throughout the ongoing calamity affecting both traditional and digital asset markets.
BlockFi is the second company to announce such a move in the past week, with asset broker, Voyager, doing the same for a reported $200M and 15,000BTC through Alameda Research.
Upon announcing this deal, representatives from each FTX and BlockFi took the time to comment.
Samuel Bankman-Fried, CEO of FTX, states, “BlockFi's team has always demonstrated a strong bias towards prudent risk management and swift action.Protecting customer assets is their top priority which allows them to operate from a position of strength. FTX is excited to partner with BlockFi, a leader in the digital asset ecosystem, to offer first-class products to customers.”
Zac Prince, CEO of BlockFi, states, “This agreement also unlocks future collaboration and innovation between BlockFi and FTX as we work to accelerate prosperity worldwide through crypto financial services. This is a significant step forward in our continued commitment to the strength and accessibility of cryptocurrency markets.”
This is undoubtedly a wise decision by BlockFi, as the company surely wants to avoid finding itself in a situation similar to the one currently enveloping Celsius. Due to its poor decisions which led to freezing platform services, Celsius Network now finds itself in the crosshairs of various securities regulators throughout the United States.
With BlockFi only recently having paid a $100M fine for offering ‘unregistered securities' through its interest bearing accounts, the company is already on regulators radar. By shoring up its reserves and gaining access to credit lines, the company has taken another step towards providing its clients assurances that their holdings are safe.
Not Immune to the Market
In addition to past regulatory woes, BlockFi has found itself at the mercy of current market conditions – along with just about every other dealing with digital assets. This is most evident through a pair of recent developments.
- Despite attaining a $3B valuation one year ago, BlockFi is believed to currently be raising a fresh round of capital in what is expected to be a ‘down-round', reports The Block.
- Along with various other companies, BlockFi has recently announced that it is dramatically reducing its workforce by up to 20%, as a means of coping with current market conditions.
While these are both signs of troubling times, it is promising to see an important player within the digital asset sector taking its role seriously, and making hard decisions to ensure it does not succumb to current pressures. Whether its reducing its workforce, raising capital at a lower valuation, or securing hearty credit-lines, these steps by BlockFi should hopefully allow for it to continue building and thrive when the next bull run begins.