FTX to acquire BlockFi for $25 million at a 99% discount

FTX plans to acquire BlockFi for $25 million after it recently gave up on buying Celsius Network due to its poor balance sheet. The acquisition will be the deal of a lifetime for FTX as BlockFi will be sold for a 99% discount from its previous valuation of $4.8 billion by Pitchbook. For the exchange, it will be another great day of its continuous acquisitions in the crypto bear market. What do you think about this huge discount?

FTX bags a superb deal

FTXBlockFi faced major turmoil due to its exposure to Three Arrows Capital, and FTX extended support by providing a credit of $250 million to them. And now, reports suggest that the company has agreed on a $25 million deal with FTX for an equity stake.

Rumors suggest that the details of this acquisition have already been written, and the companies will sign on it by the end of this week. The reports were provided by an anonymous source and spokesperson from FTX and BlockFi didn’t give any comments on the matter. If the acquisition of BlockFi goes through, it will add another company to the portfolio of FTX and Sam Bankman-Fried.

What happened to BlockFi that it is agreeing to a 99% discount?

FTX acquires BlockFi for $25 million at a 99% discount

BlockFi is a crypto lending platform, and like many others, its fate has met its end. The company is finding it difficult to deal with the crypto bear market and also recently laid off 20% of its employees. BlockFi wants more investors to deposit funds on their platform so it can stay operational. For the same, the company has increased APYs on many cryptocurrencies. At the same time, it has announced the end of 1 free withdrawal per month policy.

BlockFi states that these changes will help in better risk management, less competition in the market, and assist them in working well with the changing markets. However, the market shift has been so dramatic that they have found it difficult to make profits. Some sources also say that many equity investors in BlocFi have faced heavy losses and writing them off now. So, it doesn’t come as a surprise that BlockFi’s valuation fell so dramatically. The exposure to Three Arrows Capital, which recently got liquidated, was also a significant loss for the company.

What are your thoughts as the report suggests that FTX plans to acquire BlockFi for $25 million? And do you think this will turn out to be the best deal for the exchange? Let us know in the comments below. Also, if you found our content informative, do like and share it with your friends.

Also Read: SEC gets sued by Grayscale after rejecting its BTC Spot ETF.