Crypto lender BlockFi announced Tuesday it had received a $250 million revolving line of credit from crypto exchange FTX to help bolster its balance sheet.
Last week, BlockFi rival Celsius Networks froze all withdrawals and transfers, citing “extreme market conditions” as crypto prices have plunged, and fellow crypto lender Babel Finance followed suit. BlockFi said last week it was still satisfying all withdrawal requests and fulfilling “increased demand” from institutional borrowers, though it also announced deep layoffs and Chief Executive Zac Prince tweeted Thursday that the company liquidated a large client’s overcollateralized margin loan to mitigate risk.
“Today’s landmark announcement reinforces the commitment that BlockFi has to serving its clients and ensuring their funds are safeguarded,” Prince said in a statement Tuesday.
In a series of tweets, Prince added that the deal “further bolsters our balance sheet and platform strength,” and that “The proceeds of the credit facility are intended to be contractually subordinate to all client balances across all account types.”
The credit facility comes after FTX CEO Sam Bankman-Fried told NPR over the weekend that larger companies, such as FTX, should help struggling crypto companies when they can.
“I do feel like we have a responsibility to seriously consider stepping in, even if it is at a loss to ourselves, to stem contagion,” he told NPR on Sunday. “Even if we weren’t the ones who caused it, or weren’t involved in it. I think that’s what’s healthy for the ecosystem, and I want to do what can help it grow and thrive.”
In a statement Tuesday, Bankman-Fried said: “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.”
BlockFi and other crypto companies have felt a serious impact as cryptocurrency prices have plunged in recent months.
Bitcoin has lost about 70% of its value since peaking in November, dipping below the $20,000 level over the weekend to its lowest prices in 18 month. Bitcoin
was trading at about $20,493 on Tuesday night, according to Coinbase data, down 56% year to date. Ethereum
was trading at $1,103, down about 70% year to date.