BlockFi’s position in the market amidst the market crash.
The Tsunami of crypto market crash drowned all the cryptocurrencies and crypto exchanges, that had managed to build a clientele and a base after years of struggles and perseverance. As the market crashed, billions of dollars of investors got wiped out. This led to a lot of trust issues, financial issues and caused a lot mental stress to all the investors, CEOs and institutional representatives.
BlockFi couldn’t save it self from the Tsunami. Eventually, BlockFi was also found drowned in the catastrophe. To help the company revive back to normalcy, the company has taken a hostile decision of laying at least 20% of the work force. To add more stress to the company, the company had also promised to pay $100 Million penalty to SEC and other agencies into its high-yield accounts.
Why a penalty of $100 Million?
The Securities Exchange Commission charged $100 Million to BlockFi. The penalty of BlockFi was levied because the crypto lending company failed to register the offers and sales of its retail crypto lending product. BlockFi had to pay $1 Million to Iowa Insurance Division, as a part of the penalty. The lending company was required to halt opening new accounts for its high-yield loan product with the majority of Americans as a condition of the settlement.
FTX comes in aid of BlockFi.
According to the report, Crypto lending platform BlockFi, received a credit facility of $250 Million from the Crypto Trading platform FTX.
The CEO of BlockFi, Zac Prince, said that, “BlockFi and FTX inked a term sheet today to establish a $250 million revolving credit facility, giving us access to funds that will strengthen our balance sheet and platform.”
The credit facility is intended to be helping the company, to settle the claims of all client balances across all types of accounts. The main intention to draw the credit facility is to satisfy the company’s all the financial obligations towards all client accounts which include BlockFi interest accounts, BlockFi Personalized Yield and loan collateral.
The CEO of FTX, Bankman-Fried said that, BlockFi has received the money injection so that it can negotiate the market from a position of strength. He believes that, the company is in need of the fund, helping the company will eventually be beneficial to the market and will be worthy for him and his company. He added, “BlockFi’s careful risk management and leadership lured him into this deal.”