More insider revelations about FTX deal – BlockFi

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2022-06-30 23:21:56

This information has further revealed the current situation of BlockFi because of its involvement from Three Arrows Capital, as well as the decision to buy back from FTX.

There are more shocking revelations about the FTX – BlockFi deal. Photo: Bloomberg

On the morning of June 30, the news site TheBlock Citing an insider source, revealed more “confidential” information shared during a meeting between hedge fund manager Morgan Creek Digital, which participated in many of BlockFi’s past funding rounds, Mr. Mark Yusko with Mr. related parties.

Post by TheBlock confirmed earlier rumors published by CoinDesk, specifically that FTX had a full BlockFi buyout clause included in the $250 million loan agreement, along with other “insider only” information.

BlockFi’s valuation is now only 500 million USD

Mr. Yusko announced that the loan agreement between FTX and BlockFi was made with the company’s valuation of only 500 million USD. This is the basis for FTX’s BlockFi buyback clause because in essence, the exchange will become the company’s largest shareholder when it proceeds to contribute nearly 51% of the shares.

This news is extremely shocking because in March 2021, BlockFi raised $ 250 million at a valuation of up to $ 3 billion, and is rumored to have made another round of funding worth $ 500 million at a valuation. 5 billion USD. The new valuation launched by FTX marks a 90% drop in the company’s value.

In May and June, it was reported that BlockFi struggled to raise $ 100 million at a valuation of $ 1 billion, but it seems to have been unsuccessful and had to look to FTX.

BlockFi lends Three Arrows Capital $1 billion

Next, TheBlock confirmed that Mr. Yusko confirmed the value of the loan that BlockFi provided to the investment fund Three Arrows Capital worth up to $ 1 billion, collateralized with 2/3 in Bitcoin and the remaining 1/3 in GBTC shares. by Grayscale.

The above two-thirds of Bitcoin has been liquidated by BlockFi as confirmed by the company, but GBTC, which is estimated to be worth about $430 million, cannot be sold at this time because the stock is depreciating 34% compared to the current price. with Bitcoin. If GBTC is released, BlockFi is worried that it could crash the market.

Three Arrows Capital is a well-known crypto hedge fund, but suffered heavy losses after the collapse of LUNA-UST in May, followed by massive asset liquidation as the market continued to correct in June. This fund was found to have borrowed unsecured assets from a series of other units, creating a widespread knock-on effect.

BlockFi prepares to cut more staff

As reported by CHK, BlockFi in mid-June announced a 20% reduction in staff because of the difficult situation.

However, Mr. Yusko says this is just the beginning. During the meeting, the Morgan Creek Digital manager revealed that BlockFi was considering “more draconian austerity measures”, including the possibility of laying off “80-85%” of employees.

BlockFi’s response

Representatives for Morgan Creek Digital, BlockFi, and FTX all declined to comment on the post TheBlock. A BlockFi spokesperson stated:

“BlockFi will not comment on rumors. Information beyond the official statement of BlockFi or FTX is currently just baseless speculation.”

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