More Insider Revelations About The FTX – BlockFi Deal Appear

These information have revealed more about the current situation of BlockFi as well as the decision to buy back from FTX.

June 30, TheBlock news site, citing an insider, revealed more “confidential” information shared during a meeting between the hedge fund manager Morgan Creek Digital, which participated in many funding rounds in the past of BlockFi, is Mr. Mark Yusko with stakeholders.

TheBlock’s post confirmed rumors by CoinDesk, specifically that FTX had a BlockFi full buyback clause included in the $250 million loan agreement, along with “inside only” information know” else.

FTX valuation of BlockFi 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 with a value of up to $ 1 billion, collateralized by 2/3 with Bitcoin and the remaining 1/3 in Grayscale shares of GBTC.

The above two-thirds of Bitcoin has been liquidated by BlockFi, as confirmed by the company. Still, GBTC, estimated to be worth about $430 million, cannot be sold at this time because the stock is depreciating 34% compared to the current price of 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, BlockFi in mid-June announced a 20% reduction in staff because of the problematic 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 TheBlock’s post.

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

A BlockFi spokesperson stated

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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