The explosion of Celsuis and Three Arrows has affected many other institutions. Previously Financial Timesreport, BlockFi liquidated the collateral of Three Arrows Capital. In order to further strengthen the stability of its own balance sheet, BlockFi announced on June 21 that it has obtained a US$250 million credit line from FTX.

Encrypted lending platform BlockFi announced on June 21 that it has received a $250 million revolving line of credit from the FTX exchange. Previously, foreign media reported that BlockFi had a loan relationship with Sanjian Capital and liquidated the collateral, so many people questioned BlockFi's solvency; but BlockFi CEO Zac Prince emphasized that this credit is simply to strengthen the stability of its own balance sheet degree.

Zac Prince tweeted:

“Today BlockFi and FTX signed an agreement whereby FTX will provide a $250 million revolving credit facility, further strengthening our balance sheet and platform liquidity.”

Revolving credit is different from general credit. Revolving credit has the characteristics of fast borrowing and no binding. Within the revolving quota, BlockFi can borrow and repay at any time, no interest will be charged if the loan is not used, and no interest will be charged for repayment on the same day. In addition, there is no need to pay liquidated damages for early repayment.

Generally, an institution's balance sheet is divided into debt servicing and liquidity. Debt solvency refers to the asset-liability ratio of an institution. Usually, the assets are greater than the liabilities, which means that the solvency is safe.

However, the current market panic, what BlockFi needs to face is the liquidity problem. That is, whether the cash/assets in the assets can cope with the user's request, so judging from the Twitter content, the reason why BlockFi needs FTX's credit is to increase liquidity and confirm that users can withdraw the balance at any time.

"I couldn't be more proud of the team, platform, and risk management performance during the market volatility of the past few weeks. Today's announcement is a milestone and reinforces BlockFi's commitment to users to ensure funds are protected."

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SBF previously said: Duty to stop crisis from spreading

accessaccessAt that time, he said that he did consider intervening to prevent the crisis from spreading, which would be healthier for the encryption ecosystem.

It said:

"I did think seriously about getting involved in this crisis because we have a responsibility to do so. Even if it costs us some money, we want to stop the crisis from spreading.

Although we are not the culprit of the crisis nor have we participated in it, it is healthy for the encryption ecosystem to prevent the crisis from spreading. I want to do things that help the crypto ecosystem grow. "

However, he also emphasized again that there is no problem with BlockFi's solvency, and the reason why credit is needed is just to prevent it, which shows that BlockFi has prudent risk management.

SBF tweeted:

"BlockFi has prudent risk management and excellent situation leadership, so they will identify the counterparty risk in advance and liquidate the position. BlockFi's user assets are properly managed, and there is no debt risk from Sanjian, Celsuis, etc. .”

It is worth mentioning that this is not the first time FTX has reached out to its peers.

In total, nearly $100 million worth of cryptocurrency was stolen from Japanese cryptocurrency exchange Liquid in a hack last year. At that time, FTX provided $120 million in financing to Liquid.

1) Today we’re injecting $250m into BlockFi and partnering with them so they can navigate the market from a position of strength.

— SBF (@SBF_FTX)June 21, 2022