FTX Exchange saves BlockFi with $ 250 million

FTX Exchange saves BlockFi with $ 250 million

Is FTX saving the crypto industry or taking control of it? The cryptocurrency exchange focused on derivatives was on the sidelines, watching everything around them collapse, and finally decided to take action. That or, as the story goes, FTX created this whole situation in their labs and is now buying the property cheaply. However, there is only circumstantial evidence to that effect. Rescue, on the other hand, is completely realistic.

Earlier, BlockFi CEO Zac Prince tweeted: “Today, BlockFi signed a contract with FTX to provide a $ 250 million revolving loan that gives us access to capital that further strengthens our balance sheet and platform strength.” For his part, FTX CEO Sam Bankman-Fried responded, “Today we are investing $ 250 million in BlockFi and working with them to be able to manage the market from a position of strength.”

In recent weeks, the crypto market has been in decline. The effect of the Terra / Luna extinction infection has shaken every company, especially those that have offered returns on cryptocurrency deposits such as BlockFi and Celsius and hedge funds such as Three Arrows Capital. The problems of these companies and the possible liquidation of assets, in turn, have brought the crypto market into even greater turmoil.

Related Reading | Crypto exchange FTX USA records growth: Trading volume grew by 512% in the third quarter

What is FTX Endgame?

We would not know, but the exchange was put in a position of power with all these movements. According to Bankman-Fried, BlockFi “successfully removed risky counterparties as a precaution”, and the company acted decisively by “removing problematic counterparties before they became a problem and adding cash before it was necessary”. And yes, by “problematic partners” he means Celsius and 3AC.

For his part, Zac Prince describes it as a victory everywhere. “Through the volatility of the market over the last few weeks, I am incredibly proud of the performance of our team, risk management platform and protocol. Today’s significant announcement strengthens BlockFi’s commitment to providing services to its customers and ensuring the protection of their assets. ” However, is $ 250 million enough for a company of this size? Let’s hope so, because of our clients.

In any case, both companies seem excited about the collaboration. Prince said: “This agreement also unlocks future collaboration and innovation between BlockFi & FTX as we work to accelerate global prosperity through crypto financial services.” On the same topic, Bankman-Fried claims that FTX is “excited about partnering with BlockFi to offer industry-leading products”.

So, right now, everything is on the crypto front, right? However, what happens if BlockFi continues to lose money? Does FTX have a chance to buy an entire peanut company?

SOL price chart on FTX | Source: SOL/USD on TradingView.com

Previous BlockFi issues

In an article on this topic, Zerohedge reminds us from a recent episode in BlockFi history:

“Recall, BlockFi was fined $ 100 million in February this year for its high-interest accounts, which the Securities and Exchange Commission considered safe products.”

And, who could forget when they were gave BTC instead of stable coins to some happy users?

“One Reddit user shared a video of their bonus payment showing that they received 701.4 bitcoins, which is more than $ 24 million at the time of writing. They said they believed they owed about $ 700 and that the bitcoin transaction had been canceled. ”

Related Reading | Co-founder of BlockFi sees huge growth and FOMO for crypto in 2022.

For that, Zac Prince replied, “Our team has been tested in combat and has withstood many storms over the years, which only makes us stronger and more resilient as we move in today’s market environment.” That’s the way to put it. But what about rumors that the company lost more than $ 285 million during the bull market?

If the rumors are true, does that guarantee that their business model has failed and that they will not be able to survive in the bear market? No it’s not. But it suggests.

Featured Image by Cytonn Photography on Unsplash  | Charts by TradingView

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