Cryptocurrency lending platform BlockFi has become the subject of intense dispute. After rumors that FTX would have bought the company, now it’s Canadian Ledn’s turn to express interest in the purchase. Ledn offers the same services as BlockFi, but also provides credit for purchasing real estate backed by Bitcoin (BTC). Under the proposal, Ledn intends to acquire control of BlockFi through an investment round. That is, it would not be just a simple acquisition. Since the beginning of the week, rumors have surfaced that FTX would have bought BlockFi. In fact, anonymous sources even confirmed that the deal was closed, stating that FTX would pay $25 million to close the deal. But BlockFi CEO Zac Prince denied the news and said he would not sell BlockFi for that amount.
Ledn joins the race
According to a Bloomberg report, Ledn also made a similar proposal. But unlike FTX, its plan involves new financing rather than a full acquisition. In this sense, Ledn intends to lead a round that aims to raise US$ 400 million to finance the acquisition of companies. The company itself said it will invest US$ 50 million, double the proposal allegedly made by FTX. But Ledn CEO Adam Reeds did not provide further details about the transaction. “Given its operational strength, Ledn is currently evaluating several opportunities to extend its leadership in digital asset lending and beyond. We are currently unable to share additional details,” Reeds said. On the other hand, BlockFi classified the information as “market rumors” and declined to comment. This was the same answer the company gave regarding the purchase by FTX.
cuts and loans
The cryptocurrency market crash has caused massive disruption to several companies in the industry such as Celsius Network and BlockFi itself. This week, the company received a $250 million loan from FTX. In this regard, Prince also confirmed that BlockFi has its total workforce at approximately 20%. According to the CEO, the measure will serve to reduce costs and eliminate redundancies in the company’s services. “This decision was driven by market conditions that had a negative impact on our growth rate and a rigorous review of our strategic priorities,” he said. Shortly afterward, the State of Iowa ordered BlockFi to pay an administrative fine of nearly $1 million for failing to register as a securities trading platform.
BlockFi’s Success Before the Market Crash
The US-based company that describes itself as a “financial services company dedicated to building a bridge between cryptocurrencies and traditional financial and wealth management products” has had some pretty successful moments in the past year. In March 2021, BlockFi raised $350 million in a Series D fundraising round led by prominent investors such as Tiger Global, Bain Capital Ventures and Pomp Investments. As a result, BlockFi’s market cap valuation rose to $4.8 billion. That is, FTX’s offer corresponds to about 1% of the last valuation of the loan company. Last summer, the platform partnered with NBA star Cade Cunningham. As part of the deal, the Detroit Pistons star agreed to participate in educational videos and interviews, while BlockFi said Cunningham receives his payments directly in BTC. However, the market collapse impacted confidence across the lending sector, which suffered severe liquidity crises. Celsius Network had to block users’ cryptocurrency withdrawals, while BlockFi had to resort to lines of credit to maintain its operations. Read also: Optimism’s largest NFT market suffers hacker attack, but promises refunds to users Read also: Celsius says it’s exploring solutions to liquidity crisis
