Cryptocurrency exchange FTX Digital Markets Ltd. is reportedly close to finalizing a deal to acquire crypto lender BlockFi Lending LLC for only $25 million.

CNBC reports that FTX is close to finalizing a term sheet for the deal that is expected to be signed by the end of the week. At $25 million, the price on the table is 99% lower than BlockFi’s last private valuation of $4.8 billion in July 2021.

The report adds that the price tag could shift and that an acquisition could take multiple months to close. FTX already has an indirect stake in BlockFi, having provided the company a $250 million emergency line of credit last week.

BlockFi is officially denying the report, with Chief Executive Officer Zac Prince saying on Twitter, “I can 100% confirm that we aren’t being sold for $25 million.” Prince added that “I encourage everyone to trust only details that you directly [hear] from BlockFi.”

Whether true or not, that the deal is believable is reflective of a tale of how the mighty have fallen in crypto.

Founded in 2017, BlockFi is a nonbank lender offering crypto-backed loans, allowing investors to borrow against their cryptocurrency holdings as equity. The loans enable applicants to unlock up to 50% of the value of their assets in U.S. dollars and can be used for any purpose, from paying off credit card debt to buying a home.

The money lent by BlockFi comes from investors who deposit their cryptocurrency holdings in an interest-bearing account that promises returns of up to 8.6% annually. BlockFi also offers an exchange service that allows users to buy and sell digital assets directly, a bitcoin rewards credit card, an investment trust and private client services in Asia.

As noted when BlockFi raised $350 million on a $3 billion valuation in March 2021, the company’s fortunes surged as cryptocurrencies boomed. Fast forward to 2022 and a crypto winter that has seen the price of bitcoin drop by two-thirds since its peak in November has also hit BlockFi hard.

Despite the market downturn, FTX isn’t doing as badly as others in the cryptocurrency market, demonstrated by its ability not only to offer BlockFi a $250 million line of credit but by its interest in acquiring BlockFi.

FTX was also reported on June 27 to be exploring an acquisition of Robinhood Markets Inc., a far more expensive buy than BlockFi.

Image: BlockFi