Yesterday, the popular cryptocurrency lending company BlockFi announced a $250 million revolving credit facility from cryptocurrency exchange FTX to bolster its balance sheet and strengthen its foothold amid the bear market.
While the CEO – Zac Prince – did not delve into details of the credit facility, he noted that the proceeds would ensure that clients get their funds back if the company encountered liquidation during the meltdown.
The announcement raised concerns and many wondered if BlockFi was experiencing liquidity issues like other lending platforms and why the company would need a loan that is not meant for expansion.
An Offensive and Defensive Move
However, Prince spoke to Bloomberg in a phone interview, providing more details about the credit facility. The BlockFi CEO said the loan would help the company safeguard clients’ funds as the market continues to remain volatile.
He said the strategic partnership with FTX was “equal parts an offensive and defensive move.” He noted that people with “untrained eyes” would think that BlockFi has a similar business model to other firms, but those with “trained eyes” understand that “it’s night and day.”
“We felt that it was a smart, offensive and strategic decision for BlockFi to bolster the balance sheet with a big number and tell everybody about it,” he said.
Prince: Everything is Working
The BlockFi CEO said the company still has a great relationship with all its banking partners. According to him, the crypto lender had two Bitcoin-backed credit facilities with two banks and borrowed partial amounts before the Terra LUNA crash. Although the company still has those facilities with the banks, the drawn amount is currently zero.
He also confirmed that the company experienced high withdrawal requests last week due to fear, but the number has dropped 88% from its peak, and the decline is expected to continue. Aside from that, he noted that “everything is working as it always has.”
Meanwhile, Zac Prince also commented on the current market conditions. He believes that at some point in the future, when the crypto market turns bullish, people will look back and say, “that was a phenomenal time to buy,” because there’s still a lot of growth potential for crypto assets.
Featured Image Courtesy of Money INC
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