BlockFi, a crypto lending firm, has confirmed a $250 million credit facility from FTX FTT/USD.
What Happened: BlockFi CEO, Zac Prince, made the announcement on Tuesday. The funding endeavors to optimize BlockFi’s platform while supporting its balance sheet. As the cryptocurrency market plunges and other lending firms, such as Celsius CEL/USD, experience structural faults, BlockFi has also fallen prey to the recent crashing prices.
Major clients, with overcollateralized loans, have faced liquidations across the firm. Furthermore, BlockFi also recently announced large-scale hiring cuts. It was also announced that FTX liquidated major positions held by Celsius.
Why It’s Important: The credit facility provided by FTX, will benefit BlockFi in the turbulent market conditions in numerous ways. The funds received by BlockFi are to be “contractually subordinate” to client balances across the firm and are to be used for all account types: BPY, BIA, and loan collateral.
Furthermore, client funds will also be protected through such funds. The credit facility received by BlockFi may open doors to future partnerships between FTX and BlockFi.
In the grander scheme of things, such moves for BlockFi safeguard them against the fate suffered by their competitors, such as Celsius. Recently, it was also announced that FTX liquidated major positions held by Celsius.