The cryptocurrency market in its current predicament has left many investors and firms gasping. On Thursday, the cryptocurrency lending platform BlockFi agreed to liquidate a sizable client for defaulting on a margin loan with excessive collateral. According to a report, BlockFi was one of the firms that allegedly liquidated at least some of Three Arrows Capital‘s assets after the hedge fund failed to fulfill margin requirements.
On the other hand, the popular crypto exchange FTX has been on a roll in helping failing crypto businesses. According to BlockFi CEO Zac Prince, the firm has received a $250 million revolving credit facility from FTX, and the fund will strengthen the platform’s stability and balance sheet even further.
Prince claims that the credit facility’s proceeds will be utilized as needed and are meant to be contractually subservient to all customer balances on all account types (BIA, BPY, and loan collateral).
Prince stated,
“This agreement also unlocks future collaboration and innovation between BlockFi and FTX as we work to accelerate prosperity worldwide through crypto financial services. This is a significant step forward in our continued commitment to the strength and accessibility of cryptocurrency markets.”
In his Tweet, Prince also addressed his firm’s clients, saying he is with them. He said that the team has been through many storms and has been tried in combat, making them stronger and more resilient as they navigate today’s market landscape.
Additionally, this is not the first time FTX has stepped in to save a fellow firm in times of need. The exchange recently helped the Liquid Japanese exchange with a $120 million fund when hackers attacked the exchange.
Many are skeptical about FTX’s recent actions. FatManTerra, a famous whistleblower on Twitter, quickly replied that Prince had made a deal with the devil.
FTX has been in an expansion phase and has purchased many of the firms it has “helped” out. Its acts of helping out could be a gentle way of saying “takeover.” However, FTX’s CEO feels differently about the situation. He thinks the current times call for desperate measures, and we should help each other create a better future.
FTX chief, Sam Bankman-Fried, had stated in an interview,
“I do feel like we have a responsibility to seriously consider stepping in, even if it is at a loss to ourselves, to stem contagion.”
The FTX CEO asserts that the Federal Reserve is responsible for the shocking decline in cryptocurrency prices as the sector experiences one of its most dramatic collapses. Bankman-Fried claims that risk perceptions have been changed because of the Fed’s aggressive interest rate hikes to counteract high inflation.
The total crypto market was worth $975 billion at press time, up by 3.8% in the last 24 hours.