FTX’s proposal to rescue $250 million for BlockFi, if approved, could destroy the interests of the company’s shareholders, forcing them to act.
As reported by CoinCu, the BlockFi lending unit is one of the companies affected by the current liquidity crisis in the cryptocurrency market. Recently, BlockFi revealed that it has reached an agreement with billionaire Sam Bankman-Fried cryptocurrency exchange FTX for a loan of $250 million.
However, according to a confidential source of CoinDesk, the hedge fund Morgan Creek Digital is rushing to raise $250 million from interested institutions to prevent FTX’s BlockFi rescue through a majority acquisition company.
CoinDesk confirmed that the head of Morgan Creek Digital, Mark Yusko, has repeatedly called stakeholders and interests in BlockFi over the past few days to warn about the FTX deal.
Morgan Creek Digital, which has participated in BlockFi funding rounds in the past, will certainly be affected and therefore has decided to act. Mr. Yusko also compared Mr. Sam Bankman-Fried’s actions at this time to that of financial tycoon J.P. Morgan during the American financial crisis of 1907, when it spent a large amount of money to prevent the chain effect from spreading throughout the banks.
The head of Morgan Creek Digital revealed that the only reason for BlockFi to accept the offer from FTX is that besides being willing to provide a large amount of cash of $250 million, FTX also does not need BlockFi to take user assets to secure the loan.
In other words, in the event of bankruptcy, BlockFi can still return some assets to users in advance, instead of paying their creditors and then to users like other offers.
In order to prevent the risk that BlockFi decided to shake hands with FTX, Mr. Yusko said:
“The only alternative is to raise an equivalent amount in equity and that’s what we’re working on. I would say it’s a 10% possibility but not zero.”
In addition, on June 25, the Wall Street Journal also cited an insider who confirmed that FTX is intending to buy back shares in BlockFi, making Yusko’s disclosures more credible and has become a hot topic of discussion in the crypto community this morning.
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