BlockFi is a cryptocurrency exchange and digital wallet service provider but has struggled amidst the prevalent bear market. As a result of that, leading US-based cryptocurrency exchange FTX has given the company $250 credit to help the company remain afloat.
BlockFi Bailed Out
BlockFi will be hopeful that the brand new credit line will help to secure clients’ funds and ensure the company survives this turbulent time in the market. The company has signed a term sheet with FTX crypto exchange, which will give them a revolving credit facility.
This type of payment facility will provide the company with the ability to withdraw money, use it to fund businesses, repay it and then withdraw it again when you need it. Given that most crypto companies' liquidity is based on the market, these companies often still have the assets. But, until the market climbs, a revolving credit facility is necessary.
The announcement came from the company’s CEO Zac Prince, who confirmed the deal via a Twitter thread, stating that “The proceeds of the credit facility are intended to be contractually subordinated to all client balances across all account types (BIA, BPY & loan collateral) and will be used as needed.”
Prince was pleased with the efforts of his team during this tough period, stating that the new line of credit will be put towards safeguarding users’ funds across all types of accounts within the BlockFi network.
As companies begin to fall, many look to the LunaTerra fiasco as the main instigator of it all. The fallout has been swift and unforgiving. Major crypto exchanges like Binance and Coinbase are cutting staff, with many other smaller crypto firms following suit. To that point, it would seem staff cuts in the industry are a daily news item at the moment.
Market turmoil has upended certain companies altogether. In some cases, such as recent issues with Celsius and Babel Finance, we’re seeing firms blocking withdrawals, due to the fact these companies don’t have the liquidity to pay out.
While everyone sits and prays the markets will climb once again, the forecast for the global market looks bleak. For now, these kinds of companies must scramble for third-party financial intervention and hang on until they can stabilise.