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BlockFi confirmed to borrow $400 million from FTX, with an option to buy it outright for $240 million

BlockFi CEO Zac Prince on July 1 announced a $400 million line of credit from FTX and an option to acquire the entire company for up to $240 million depending on performance.

The statement comes less than 24 hours after CNBC reported that BlockFi was acquired by FTX for just $25 million. Prince denied the claims immediately but withheld further information until Friday afternoon.

FTX’s president, Brett Harrison, says he’s “excited” to help BlockFi through a “strategic partnership.

Prince confirmed that BlockFi has not requested a loan and that all BlockFi services “continue to operate as normal.”

In a multi-part thread on Twitter, Prince detailed the events leading up to the deal, including confirming that recent market volatility had a “negative impact on BlockFi.”

Prince asserts that BlockFi is “contactless” to Celsius, however, subsequent customer withdrawals have led to liquidity problems with the company.

Prince, on the other hand, confirmed that BlockFi lost $80 million in liquidation of the loan granted to 3AC.

The BlockFi CEO said the loss did not affect customer funds and was 3AC’s only involvement in the company. “BlockFi’s risk framework combines counterparty credit analysis, collateral cuts, and portfolio caps, and we don’t have any client funds in DeFi protocols,” he added.

The decision to secure an agreement with FTX was made to “add capital to our balance sheet to enhance liquidity and protect customer funds.”

After securing additional investment, Prince stated that “there are even more advantages in the future” for BlockFi customers due to FTX’s “free” products. He then commented on the increase in FUD in the crypto market and tried to quell fears by saying that crypto is “a growing ecosystem.”