Sam Bankman-Fried's FTX crypto exchange has signed a deal with an option to buy embattled crypto lender BlockFi for up to $240 million, BlockFi Chief Executive Zac Prince said on Friday.
FTX has also agreed to provide BlockFi with a $400 million revolving credit facility, Prince said in a tweet. He added that BlockFi has faced a jump in withdrawals after news of crypto lending platform Celsius Network's freeze.
Fears of a possible U.S. recession due to aggressive rate hikes from the Federal Reserve have roiled risky assets this year, including cryptocurrencies. That has sparked a meltdown in what was just last year a booming industry.
Last month, BlockFi cut 20% of its headcount and implemented multiple cost-cutting measures such as reducing marketing spending and executive compensation.
Companies use revolving credit facilities as backstop financing to combat adverse impacts on other sources of income. For the most part, these facilities remain undrawn.
(Reporting by Niket Nishant in Bengaluru; Editing by Aditya Soni)