Did FTX emerge as BlockFi’s saving grace?

Sahana Kiran
Source – Unsplash

The crypto-verse has been dealing with a lot of failed projects over the last couple of weeks. Starting from the infamous crash of Terra, all the way to an array of firms filing for bankruptcy, the bears have hit the market harder than expected. One firm, BlockFi, however, is speculated to have dodged bankruptcy.

Prominent crypto lender, BlockFi’s CEO Zac Prince appeared in an interview with CNBC. While the host outrightly asked Prince if FTX saved his firm from bankruptcy, he decided to rather evade the same.

He noted that the whole deal was to bring in additional capital into the business. Prince even labeled FTX’s deal as the “best transaction” that they had acquired from the market. He also affirmed that BlockFi was in a much better position than it was a month or two ago.

Elaborating on FTX’s deal, Prince said,

“The goal of this deal from BlockFi’s perspective was to bolster our balance sheet. The second aspect is an option (for FTX) to acquire BlockFi for up $240 million. This can be exercised at the earliest in the fall of 2023.”

BlockFi’s Brief Backstory

BlockFi was time and again mentioned during the whole Three Arrows Capital’s [3AC] insolvency ordeal. Right after 3AC filed for bankruptcy another popular crypto lender, Voyager followed suit. It was revealed that BlockFi swiftly liquidated 3AC after realizing that the Zhu Su-led firm was unable to repay its loan. The loan was reportedly worth $1 billion and was over collateralized by 30 percent.

While the loss incurred by BlockFi was mostly kept under wraps, it realized around $80 million in losses through the liquidation process. Since BlockFi is speculated to have both realized as well as unrealized losses, several began suggesting that the firm might file for bankruptcy.

FTX however veered in and put forth an “option to acquire” BlockFi for up to $240 million. While several suggest that FTX quite literally saved the troubled platform from bankruptcy, the executives of the platform were rather mum about it. Further speaking about the deal, Prince added,

“Over the long term, we see really interesting synergies between the two firms. I am really impressed with what Sam and the FTX team have done throughout this time supporting the industry.”

The not-so-pleased community…

The community, however, wasn’t very pleased with Prince’s answers.

Some even lauded the BlockFi CEO for its “marketing approach.” A Twitter user said,

“Did anyone see zac prince on @CNBC just now? Asked if BlockFi would have been bankrupt without SBF. Wouldn’t give a straight answer. Very good marketing approach but those of us who see through the nonsense know they were probably bankrupt without SBF”

Another Twitter user called out Prince for dodging the questions.

Watcher.Guru has reached out to BlockFi for a comment regarding bankruptcy claims. The article will be updated once we receive a response.