- Blockchain.com stresses that it is not selling any of its business to other crypto firms.
- The company however does not deny that it is seeking to raise capital.
- The exchange suffered a great loss when Three Arrows Capital went bankrupt before paying a $270 million loan.
Blockchain.com, a financial services and cryptocurrency exchange company, has denied rumors that it is looking to sell any of its assets or subsidiaries, or that it talks with other cryptocurrency firms about prospective sales.
This is contrary to reports from anonymous sources that state that in December and January, management at the company explored selling sections of its business to other crypto companies, including Coinbase.
Although the firm has been trying to raise additional capital to sustain its operations since October 2022, even at a severe discount to previous valuations, Blockchain.com insists that it has not attempted to sell any parts of its business. Through its spokesperson to Cointelegraph, the firm said:
“No Blockchain.com businesses are for sale. Blockchain.com is an asset buyer, not a seller. “
During the talks in October, the potential round was estimated to result in a valuation of $3 billion to $ 4 billion, down from $14 billion in early 2022, as reported by Bloomberg. Despite the devaluation, the potential round was expected to assist Blockchain.com in better navigating the crypto bear market that has rocked the industry.
The exchange’s value shot up to $14 billion from $5.2 billion after it received funding led by global venture capital firm Lightspeed Ventures and investment management firm Baillie Gifford & Co in March 2022. Before that, Blockchain.com received a budget of $120 million from several venture capital firms in February 2021. They then quickly secured $300 million more in March during a Series C round led by DST Global Partners, Lightspeed Venture Partners, and VY Capital.
However, more recently, the firm’s investment unit had to sell 80% of its stake in PolySign, a startup focused on financial infrastructure. In January, the company also laid off 28% of its employees, that is about 110 people. This was after another massive layoff of 150 employees in July 2022 due to the loss incurred from a $270 million loan to Three Arrows Capital (3AC), now an insolvent hedge fund.
Desperate for investment
Blockchain.com had a very successful funding year in 2021, receiving $ 500 million in 18 months. However, the collapse of 3AC has left Blockchain.com scrambling for survival as the company lost a staggering $270 million, which created a massive hole in its books.
On January 4, the exchange’s CFO, Adam Schlisman, and Chief Strategy Officer, Dan Bookstaber, the Global Head of Institutional, filed for a Regulation D offering with the SEC.
A Regulation D offering is used to raise funds from unregistered securities. It enables a company to raise money fast without registering a new security, which can be very time-consuming.
However, for this to happen, compromises and tradeoffs are inevitable. The 506(c) exemption referenced in Bookstaber and Schlisman’s filing, for instance, indicates they can only raise funds from accredited investors, that is, individuals with a net worth of more than $1 million or a gross annual income of at least $200,000, as defined by the SEC.
As such, the two Blockchain.com executives stated in the filing that they were providing shares in exchange for investments of at least $1 million. Nonetheless, sales had yet to be completed as of January 4.
