FTX had earlier floated a $250 million line of credit to BlockFi in a bid to stabilize its bleeding cash flows
The crypto lender has been one of a number of recent operators caught off guard by slumping crypto markets

Cryptocurrency exchange FTX has accelerated its shopping spree with a soon-to-be finalized purchase of beleaguered digital assets lender BlockFi, according to three sources familiar with the matter.

The move comes after FTX founder Sam Bankman-Fried lined up a $250 million emergency cash infusion for BlockFi, which — like scores of competitors — has found itself deeply underwater given the market turbulence surrounding Celsius and Three Arrows Capital.

BlockFi was a large lender to Three Arrows, which is currently undergoing a court-mandated restructuring.

“Three Arrows really created this contagion,” one source said.

The move was accelerated by rival cryptoasset managers mounting competing bids for BlockFi — as those operators attempted to stop FTX from using debt-to-equity convertible notes, which would have diluted their own stakes in the company.

The acquisition, for BlockFi, would likely involve additional layoffs, sources said, adding Bankman-Fried is predominantly interested in profiting from the company’s technology, investors and counterparties. A spokesperson for BlockFi told Blockworks the company “does not comment on market rumors” and denied the prospect of staff cuts, citing a statement from the firm’s chief executive.

Earlier reports, citing a leaked investment call from BlockFi backer Morgan Creek Capital, said the deal would trigger a large number of layoffs.

CNBC first reported the deal, referencing anonymous sources to peg the price tag at approximately $25 million — an astonishing 99% decrease from its earlier valuation. The Block earlier reported the likelihood of the purchase for the same amount.

Sources for Blockworks requested anonymity to discuss sensitive business dealings. A spokesperson for FTX did not immediately have a comment.

Get the news in your inbox. Explore Blockworks newsletters:

The Breakdown: Decoding crypto and the markets. Daily.
0xResearch: Alpha in your inbox. Think like an analyst.

acquistion