Crypto lender BlockFi is set to close a funding round at a lower valuation than its previous raises, according to a report by The Block.
- The round will value the New Jersey-based firm at $1 billion, according to the report, which cites sources with knowledge of the matter.
- The funding, known as a "down round," occurs when a company seeks to raise more capital and discovers that its valuation is lower than during a previous financing.
- BlockFi raised $350 million at a larger valuation of $3 billion in March last year. It was reportedly set to raise a further $500 million, valuing it at nearly $5 billion, in late July and had also been making known its plans to go public.
- The lower valuation points to the more challenging atmosphere in the crypto industry at present as well as regulatory uncertainty surrounding firms such as BlockFi, which offers high-interest payouts against crypto holdings.
- In February, the firm agreed to pay a total of $100 million in penalties to the U.S. Securities and Exchange Commission (SEC) and several state regulators as part of a settlement in an investigation into whether its high-yield lending product was a securities offering.
- When contacted by CoinDesk regarding the news, BlockFi responded that it does not comment on market rumors.
UPDATE (13:35 UTC June 7): Adds comment from BlockFi
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.