Crypto lender BlockFi, among those hit hard by the current liquidity crunch in crypto lending, has been offered substantial financial backing by rival Ledn, according to a report. report by Bloomberg.
The announced deal would involve $400 million in funding and a $50 million capital contribution backed by crypto VC ParaFi Capital.
Ledn’s proposal is also potentially more attractive than major exchange FTX’s recent offer to buy the once-valued $3 billion company for just $25 million, originally reported by CNBC.
BlockFi CEO Zac Prince took to Twitter this week, however, to deny the reports that FTX, which previously provided BlockFi with a $250 million emergency support package amid market turmoil, would buy the company.
There are a lot of market rumors – I can 100% confirm that we are not sold for $25 million.
I encourage everyone to only trust the details you hear directly from @BlockFi.
“Given its operational strength, Ledn is currently evaluating a number of opportunities to expand its leadership in digital asset lending and beyond,” Ledn CEO Adam Reeds told Bloomberg. “At this time, we cannot share any additional details.”
Ledn is a Canada-based lender offering a 7.5% annual return that seemingly stands out from risky investments in decentralized finance (Defi) assets.
BlockFi and lenders on rocky ground
Other lenders offering high returns like BlockFi and Celsius have faced runs on their reserves in recent days as investors flee amid the market meltdown.
These lenders offered returns of up to 10% on certain cryptocurrencies, obtained by lending user deposits to investors placing risky bets with high returns.
The downside of this strategy was made public last month when a $1 billion loan from BlockFi to crypto hedge fund Three Arrows Capital (3AC) liquidated.
Neither Ledn nor BlockFi responded to comments before press time.
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