Crypto lender BlockFi has secured a $250 million revolving line of credit from crypto exchange FTX, CEO Zac Prince announced Tuesday morning on Twitter.
“Today @BlockFi signed a term sheet with @FTX_Official to secure a $250M revolving credit facility providing us with access to capital that further bolsters our balance sheet and platform strength,” he wrote in a Twitter thread.
Prince said the proceeds from the FTX loan are contractually subordinate to all client balances, meaning that BlockFi will satisfy its obligations on client accounts—BlockFi Interest Accounts, BlockFi Personalized Yield and loan collateral—before paying FTX.
The company has been especially hard hit in the downturn. Last week BlockFi joined the growing list of firms reducing their workforce to weather the crypto winter, cutting its staff by “roughly 20%.”
At the time, Prince said on Twitter that all of BlockFi’s products and services would continue to operate normally.
It’s a timely disclaimer.
Celsius, one of BlockFi’s crypto lending competitors, froze account withdrawals, swaps and transfers last Sunday to help it weather “extreme market conditions.” Yesterday, the company said it needs more time to stabilize before unfreezing accounts.
Meanwhile, BlockFi has hit its own headwinds. Last week, the company made a $1 million payment to the Iowa Insurance Division as part of a larger $100 million penalty that BlockFi agreed to pay to settle an investigation into its high-yield accounts.
In his announcement of the line of credit, Prince hinted that it could open the door to a partnership between FTX and BlockFi.
“This agreement also unlocks future collaboration and innovation between BlockFi & FTX as we work to accelerate prosperity worldwide through crypto financial services,” he said on Twitter.
The feeling seems to be mutual. Yesterday, Sam Bankman-Fried FTX CEO said the cryptocurrency exchange has a “responsibility” to bail out struggling companies during this unrelenting bear market.
“Even if we weren’t the ones who caused it, or weren’t involved in it,” he said, referring the wave of “contagion” that’s impacting crypto markets. “I think that’s what’s healthy for the ecosystem, and I want to do what can help it grow and thrive.”