As the market was plummeting, the crypto lending platform Block Fi was not in a good position, and to help the lending company out of its misery FTX came into the picture. FTX which happens to be a cryptocurrency exchange agreed to give $250 Million as credit facility to Block Fi to fight the battle.
The CEO of Block Fi, Zac Prince also went on to tweet on 21st June that, they have already signed a preliminary term sheet. One of the spokes persons from Block Fi also said that, the deal is in talks and negotiations are happening and any news about the deal cannot go public. He added that, the information about the deal will be made public on a later date.
Morgan Creek Digital to be affected by FTX’s offer.
Block Fi’s long time investor Morgan Creek is anticipating that, the deal will wipe out all the share holders of Block Fi. According to information which was leaked from a call, the cryptocurrency investment firm Morgan Creek Digital is planning to raise $250 Million from its investors which would be used to purchase a majority of stake in Block Fi. The move from Morgan Creek was a reaction to the news of FTX lending $250 Million to Block Fi.
Mark Yusko’s words.
Picture Credits: Business Insider
According to the managing partner of Morgan Creek Digital, Mark Yusko, the credit line offered by FTX possessed a big threat for the existing share holders of Block Fi. The credit line essentially will give FTX a chance to buy out Block Fi at zero cost, which was result in removal of existing shareholders, termination of employees and change in the management structure.
He also ackowleged that, Block Fi received the best deal from FTX at a time where no other company was coming in the aid and therefore the company is justified in signing the preliminary agreement.
In the leaked call, Yusko also acknowledged that his company is ready to work with FTX. He added that, they would be ready for an “In-between deal” where FTX and Morgan Creek Digital both put up a portion of the capital. He also added that, he will pursue and try and close the deal among the companies.
Yusko also acknowledged the fact that, while Morgan Creek was putting its best foot forward to save its investment in Block Fi, success was far from assured. He concluded by saying, “It’s not done yet, but the prospects for future definitely look dark.”
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