Crypto exchange FTX is set to make the best buyout deal this year when it finalizes terms to acquire BlockFi, a crypto lending services platform that rose to prominence following the 2021 bull run.
A new report has it that the floor price for FTX.US’ acquisition agreement with BlockFi has been placed at $15 million, with the price tag increasing based on “performance.”
According to people familiar with the situation, FTX US may be granted approval to purchase BlockFi for the minimal price of $15 million.
This figure is lower than the $25 million disclosed by CNBC in its report months earlier, prompting BlockFi CEO Zac Prince to tweet, “I can affirm 100 percent that we are not being sold for $25M.”
The sale price is a far cry from the $3 billion value BlockFi obtained during a March investment round wherein the company secured $350 million.
The initial purchase agreement was made public on July 1, when Prince acknowledged that the $240 million deal was contingent on “performance triggers” and that “crypto market volatility, including market developments connected to Celsius and 3AC, had a detrimental influence on BlockFi.”
Buying out BlockFi shouldn't even make a dent to SBF's cashbox. Image: Xconomy.
Sources added that FTX US would pay $25 million more if BlockFi wins an important regulatory clearance from the U.S. Securities and Exchange Commission by December 31 for BlockFi Yield, a product that would drum up interest on depositors’ cryptocurrency by lending it out at a higher interest rate.
Moreover, if BlockFi’s client assets reach a minimum of $10 billion by October 2023, FTX US will pay an additional $100 million. FTX US has reportedly agreed to pay a sum equal to a quarter of BlockFi’s annual operating revenue, up to a maximum of $100 million.
Sam Bankman-Fried, the founder and CEO of FTX, is estimated by Forbes to be worth close to $20 billion, placing him at No. 79 on the list of the world’s richest people.
So, buying out BlockFi shouldn’t be a problem to the 30-year old billionaire. Fifteen million bucks is peanuts to him.
On June 27, FTX granted $250 in credit to BlockFi, whose operation has been severely hit by the ongoing bitcoin market crisis. BlockFi has since reduced its headcount by roughly 20%, joining a large number of other bitcoin companies in reducing employment.
Last year, following an investment round, BlockFi was estimated to be worth approximately $4.8 billion. Currently, the company is being purchased for a steep discount of $15 million compared to its previous price.
Crypto total market cap at $1 trillion on the daily chart | Source: TradingView.com Featured image from Coincu News, chart from TradingView.com
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