Sam Bankman-Fried’s crypto trading platform FTX has agreed to lend struggling crypto lender BlockFi $400 million in revolving credit with an option to buy BlockFi at a variable price of “up to” $240 million, adding to a previously announced term sheet.

New Jersey-based BlockFi was valued at $5 billion in a private valuation in 2021 and was last valued at $4.8 billion, according to PitchBook.

BlockFi CEO Zac Prince tweeted on July 1 about the expanded deal, claiming that it will ensure client funds are protected.

Yesterday we signed definitive agreements, subject to shareholder approval, with FTX US for:

1. A $400M revolving credit facility which is subordinate to all client funds, and
2. An option to acquire BlockFi at a variable price of up to $240M based on performance triggers.

— Zac Prince (@BlockFiZac) July 1, 2022

Billionaire Bankman-Fried is getting a reputation as a kind of “crypto Federal Reserve,” stepping up during the trading downturn in the crypto market that has pushed some of the biggest participants into the red. As a lender of last resort, his company Alameda Research provided a $500 million loan to Voyager.

Crypto lenders, which provide high yields for investors, came under renewed scrutiny after Celsius Network froze customer withdrawals on June 12. The next day, BlockFi announced it would lay off 20 percent of staff to cut costs. The company had struggled to close a new round of venture funding and anticipated lowering its valuation to get investors, The Block reported.

“Sam Bankman-Fried’s FTX is taking advantage of rampant instability in the crypto lending market to assert itself while propping up major institutions,” Techcrunch reported.

The line of credit and potential BlockFi sale, “together with other potential consideration, represents a total value of up to $680M,” Prince tweeted. “We have not drawn on this credit facility to date and have continued to operate all our products and services normally. In fact, we raised interest rates, effective today.”

This, together with other potential consideration, represents a total value of up to $680M.

We have not drawn on this credit facility to date and have continued to operate all our products and services normally. In fact, we raised interest rates, effective today.

— Zac Prince (@BlockFiZac) July 1, 2022

BlockFi’s valuation is a key consideration in the deal, Yahoo Finance reported. CNBC pegged its value at $25 million — a 99 percent discount from its close-to $5 billion valuation in 2021.

“The price tag is well below BlockFi’s last valuation, leaving equity investors in BlockFi ‘wiped out’ and writing off the value of their losses,” CNBC reported.

CNBC’s reporting of a $25 million sale was unfounded, according to Yahoo.

Prince didn’t say in his tweets what the low end of the deal could look like said. The final BlockFi purchase value will depend on BlockFi’s performance, he tweeted.

Sources speaking on condition of anonymity told CNBC that FTX is expected to buy BlockFi for about $25 million — 99 percent less than BlockFi’s last private valuation. 

In the fallout of the crypto bear market, one of the biggest casualties — major crypto hedge fund Three Arrows Capital — has gone into liquidation.

A CNBC source said equity investors in BlockFi had been “wiped out” and were writing off the value of their losses. BlockFi had more than one deal on the table.

Photo: Sam Bankman-Fried, founder and CEO of FTX, testifies at a Congressional hearing on digital assets and the future of finance, Dec. 8, 2021. (Photo By Tom Williams/CQ-Roll Call, Inc via Getty Images)