September 30, 2022

Sam Bankman-Fried, CEO of crypto derivatives exchange FTX, speaks during a House Financial Services Committee hearing in Washington, DC, US, on Wednesday, December 8, 2021.

Stephanie Reynolds | Bloomberg | Getty Images

Sources told CNBC that FTX is poised to buy crypto lender BlockFi for pennies on the dollar.

The terms sheet is almost near the finish line and is expected to be signed by the end of the week, according to one of the sources, who asked not to be named because the deal discussions were confidential. FTX will pay out nearly $25 million – 99% less than the last private valuation of BlockFi. The Jersey City, New Jersey-based BlockFi was last valued at $4.8 billion, according to PitchBook.

A source said the acquisition could take several months, and the price could change between now and Friday. Friday also marks the end of the quarter, which the person said was the catalyst for signing the deal. The Wall Street Journal first reported that FTX was Pursuit Share in the company, while roadblock This week I reported that an outright deal was in the works.

A spokesperson for FTX said the company “will not comment on the matter.” A BlockFi spokesperson said the company “does not comment on market rumours.”

The fire sale comes a week after FTX provided BlockFi with a $250 million emergency line of credit. FTX CEO Sam Bankman-Fried said at the time that the funding would help BlockFi “navigate the market from a position of strength.”

It’s the latest fallout for crypto lenders amid the slump in crypto-asset prices. Funds suffered from liquidity problems as counterparties failed to meet margin calls. Celsius and CoinFlex have temporarily suspended customer withdrawals due to “extreme market conditions.” CNBC previously reported that major crypto hedge fund Three Arrows Capital has been liquidated, marking one of the biggest losses in the bearish cryptocurrency market.

Another source said BlockFi equity investors have been “wiped out” and are now writing off their losses. The person said that several offers are being considered, because there is no “shopping clause” in the terms sheet.

“There was more than one deal on the table,” a source told CNBC.

Billionaire Bankman-Fried is seen as the lender of last resort in space. In addition to BlockFi, Bankmanfried’s Alameda Research has provided a $500 million loan to Voyager.

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