Acquisition talks between BlockFi and FTX may be nearing an end.
Unnamed sources told CNBC on Thursday that CEO Sam Bankman-Fried’s FTX cryptocurrency exchange could pay about $25 million to acquire the struggling crypto lender.
Although his company declined to comment to Decrypt, BlockFi CEO Zac Prince took to Twitter to discredit the news.
“Lots of market rumors out there,” Prince wrote in a tweet shortly after the CNBC story went live. “I can 100% confirm that we aren’t being sold for $25M.”
If a deal did come close to that, FTX would be paying pennies on the dollar for the embattled cryptocurrency lending company. BlockFi, which is based in New Jersey, had a valuation of $3 billion when it raised its $350 million Series D round last March.
Since then, the company has reached a $100 million settlement with state regulators and the U.S. Securities and Exchange Commission over its BlockFi Interest Accounts and is rumored to now be holding a large portion of toxic debt as part of the fallout from hedge fund Three Arrows Capital’s liquidation.
An FTX spokesperson told Decrypt in an email that it “would not be commenting on the matter.” Meanwhile, a spokesperson for BlockFi said the company “does not comment on market rumors.”
In the past week, BlockFi and FTX announced that the lender had secured a $250 million revolving line of credit from the exchange.
"This agreement also unlocks future collaboration and innovation between BlockFi & FTX as we work to accelerate prosperity worldwide through crypto financial services," BlockFi CEO Zac Prince tweeted at the time.
If FTX does wind up acquiring BlockFi, it won’t be the first time that it started term sheet negotiations by offering a bailout. The exchange did something similar with Japanese fintech company Liquid Group, and ultimately closed the deal to buy the company for an undisclosed amount in April.
FTX offered the company a $120 million loan after it had $90 million stolen in a hack and then announced that it was in talks to acquire the company in February this year.