By Geoffrey Smith

Investing.com -- FTX is set to carry on its demonstration of vulture capitalism with a deal to buy distressed digital asset platform BlockFi for a mere $25 million, according to various reports.

Sources told CNBC that a deal could be finalized relatively soon. If confirmed, that would represent a near-total wipeout for BlockFi's existing shareholders, barely a year after it raised $350 million at a valuation of $3 billion.

However, BlockFi CEO Zac Prince appeared to pour cold water on the report, tweeting:

"Lots of market rumors out there - I can 100% confirm that we aren’t being sold for $25M." Prince said the company would "share more...as soon as we can."

One important part of the deal will be the fate of the $250 million revolving credit facility that FTX agreed to give BlockFi two weeks ago.

BlockFi is one of a number of digital asset platforms caught out by the collapse of hedge fund 3 Arrows Capital, which has defaulted on a string of loans as prices for Bitcoin, Ethereum and other cryptocurrencies have tumbled under pressure from rising interest rates this year. BlockFi's liquidity was already under some strain after it agreed to pay $100 million in penalties to the U.S. Securities and Exchange Commission (SEC) and regulators in various U.S. states, to settle an investigation into its high-yield lending products. The regulators had contended that this was an illegal unregulated securities offering.

For FTX, the deal extends a buying spree that is rapidly turning it into one of the world's top three crypto exchanges. In addition to the BlockFi bailout, it also offered a similar $250 million facility to Canada-based Voyager Digital (TSX:VOYG), in which FTX owner Sam Bankman-Fried indirectly holds an 11.9% stake.

It's not clear whether FTX or Bankman-Fried personally have any exposure to BlockFi. However, in a recent interview, Bankman-Fried had hinted that the motives for his intervention weren't just tied to growing FTX.

"You know, we're willing to do a somewhat bad deal here, if that's what it takes to sort of stabilize things and protect customers,” Bankman-Fried told Forbes. He acknowledged that many crypto investment platforms are "secretly insolvent".

One company not about to be rescued by FTX is Celsius Network. The Block on Thursday reported that Bankman-Fried had passed on the opportunity to buy it after finding a $2 billion hole in its balance sheet. Celsius, which suspended client withdrawals 19 days ago citing "extreme market conditions", said in a blog post on Thursday that it is looking at restructuring its debts and considering "strategic transactions" but didn't comment on The Block's report.