Report: FTX Eyeing a Stake in Crypto Lender BlockFi
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The crypto market has witnessed a slew of activities since the crypto winter began in May. Several moves have been made, and according to recent reports, a popular centralised exchange, FTX, still has moves up its sleeves.
Recent reports indicate that FTX may own a stake in popular crypto lending giant, BlockFi.
Decisive Agreements Still in the Works
The crypto market has been on a downtrend following several high-profile collapses in the last few weeks. Several crypto trading platforms have struggled to stay above water due to growing customer withdrawal requests.
This has seen platforms like Celsius halt withdrawals to ensure that there is no conventional ‘run on the bank’ situation. While several firms have backed out, the Bahamas-based Bitcoin trading platform, FTX, has been swimming against the tide. The crypto derivatives trading platform has so far given out over $600 million as a ‘bailout’ for crypto firms facing potential liquidation.
One of its recent efforts could see it acquire a stake in a US-based crypto lending platform, BlockFi. According to a Wall Street Journal report, FTX is working on owning a part of the company, but no decisive agreements have been reached yet. The report is a new spin on an extended relationship between the crypto platforms.
BlockFi CEO Zac Prince announced in the past week that the crypto trading platform had issued a $250 million line of credit. Prince stated that the debt will be placed much lower than its client funds, meaning its customers will get paid before FTX.
Today @BlockFi signed a term sheet with @FTX_Official to secure a $250M revolving credit facility providing us with access to capital that further bolsters our balance sheet and platform strength.
— Zac Prince (@BlockFiZac) June 21, 2022
Crypto Winter Is Ideal for Buying Spree
FTX’s investments have continued to spike. The crypto exchange initially focused on partnering with sports brands. Its 19-year partnership with the National Basketball Association (NBA) Miami Heat is a recent testament to this focus.
However, during this recent crypto winter, FTX has worked closely with its venture capital arm, Alameda Research, to help struggling decentralised finance (DeFi) service providers. Besides BlockFi, Voyager Digital has benefited from FTX’s largesse.
In a press release, the crypto investment platform announced the infusion of a $200 million revolving line of credit and 15,000 Bitcoins in crypto assets. According to the press release, the agreement is a non-binding term sheet targeted at safeguarding customer assets in the face of the current market downturn.
Voyager Digital has followed up with a more significant piece of news. The platform recently announced that Sam Bankman-Fried’s Alameda Research currently holds 22,681,260 shares of the crypto brokerage firm. This represents about 11.56% of the company’s shares, making the Sam Bankman-Fried the highest shareholder, above Banc Funds Company.
While others may term this an exploitative move, Bankman-Fried has said his motive is purely altruistic. According to him, Alameda Research and FTX consider now a better moment to step in and stem the downward trajectory showing in the crypto space even if it amounts to a loss to the company.
He has also criticised the offhanded tactics several venture capital (VC) firms have engaged in, in the past weeks. According to a short tweet, VC firms are only concerned with making a profit from investments. They do not care about helping the crypto market to ride the waves.
VCs: "we'd love to help you backstop crypto firms and provide liquidity because we care deeply about preventing market contagion"
also VCs: "can we please do it for the one great company (after you fix it) and make a lot of money doing it, you can take the others k thx bye"
— SBF (@SBF_FTX) June 23, 2022
Not FTX or Bankman-Fried’s First Rodeo
FTX’s bold moves in the crypto market may leave several unsettled, but the platform already has a stellar track record. In an August 2021 blog post, Liquid Finance announced debt financing from the crypto exchange to the tune of $120 million. FTX has gone on to acquire the Japanese-based Bitcoin exchange.
Following these steps, Bankman-Fried has continued to increase his portfolio. The furry-headed crypto evangelist reportedly owns 7.8% of zero-commission crypto and stock trading platform Robinhood.
Also, he owns 8.4% of the Bitwise Crypto Index Fund, covering the top 10 crypto assets by market valuation.
Bankman-Fried’s moves may seem like something out of a playbook, but the billionaire keeps his eye on the ball. According to previous accounts, Bankman is looking to buy financial giant Goldman Sachs and the Chicago Mercantile Exchange (CME).
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