Crypto Lender Ledn Joins the Acquisition Battle for BlockFi (Report)
The cryptocurrency platform Ledn reportedly displayed intentions to acquire a stake in BlockFi (a digital asset firm that provides crypto-backed loans). Previously, FTX also announced plans to buy the latter, offering just $25 million to close the deal.
Ledn Joins the Race
The cryptocurrency market crash has caused huge disruption to multiple firms part of the industry, with BlockFi being among those. Earlier this month, CEO Zac Prince said the company will reduce its total workforce by approximately 20% as the redundancies will impact every team at the organization.
“This decision was driven by market conditions that have had a negative impact on our growth rate and a rigorous review of our strategic priorities,” he stated.
Shortly after, the State of Iowa ordered BlockFi to pay an administrative penalty of nearly $1 million for failing to register as a securities trading platform.
Amid all these issues, the struggling company obtained a credit from FTX worth $250 million. Days later, the leading exchange presented its intentions to purchase BlockFi for a mere $25 million (considering the fact that BlockFi’s latest known private valuation hit $3 billion). Prince, though, refuted the rumors that the amount will be just $25 million.
According to a recent coverage by Bloomberg, the Canada-based crypto lender – Ledn – made a similar proposition, too. Contrary to FTX, its plan involves fresh funding instead of a complete acquisition.
People familiar with the matter disclosed that Ledn will lead a $400 million fundraiser and provide a $50 million equity contribution that could grant it a significant proportion of BlockFi. Asked for a comment, Chief Executive Officer Adam Reeds said:
“Given its operational strength, Ledn is currently evaluating a number of opportunities to broaden its leadership in digital asset lending and beyond. At the moment, we cannot share any additional details.”
On the other hand, BlockFi classified the information as “market rumors” and declined to comment.
BlockFi’s Success Prior to the Market Crash
The US-based firm that describes itself as a “financial services company dedicated to building a bridge between cryptocurrencies and traditional financial and wealth management products” had quite successful moments last year.
In March 2021, it raised $350 million in a Series D fundraising round led by prominent investors such as Tiger Global, Bain Capital Ventures, and Pomp Investments. As a result, BlockFi’s valuation surged to $3 billion.
Last summer, the platform partnered with the NBA star Cade Cunningham. As part of the deal, Detroit Pistons’ icon agreed to participate in educational videos and interviews, while BlockFi said his efforts will be paid directly in bitcoin.
Towards the end of 2021, the company filed for a physically-backed bitcoin ETF with the US SEC. The product, called “BlockFi NB Bitcoin ETF” (with a ticker symbol BBBB), is supposed to issue shares that track the performance of the primary cryptocurrency held by the trust.
