Sources told CNBC that FTX is buying Blockfi for pennies on the dollar.
The term sheet is almost done and is expected to be signed by the end of the week according to a source who asked not to be named. FTX will pay less than the last private valuation. According to PitchBook, BlockFi was valued at 888-492-0 888-492-0.
The price tag could change between now and Friday as an acquisition could take months to close. The end of the quarter is when the person said it was that led to the deal being signed. The Wall Street Journal reported this week that FTX was looking for an equity stake in the company, while the Block reported this week that a deal was close.
The company would not be commenting on it. The company doesn't comment on market rumors, according to a spokesman.
BlockFi received a $250 million emergency line of credit from FTX. FTX CEO Sam Bankman- Fried said that the financing would help BlockFinavigate the market from a position of strength.
It is the latest blow for the companies that lend money to people in the virtual world. Liquidity issues have been a problem for funds. Customer withdrawals were stopped due to extreme market conditions. One of the biggest casualties of the bear market has been Three Arrows Capital.
Equity investors in BlockFi have been wiped out and are now writing off their losses, according to a source.
A source said there was more than one deal on the table.
Bankman- Fried has been seen as a lender of last resort. A $500 million loan was provided by Bankman- Fried's company.
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