FTX and Morgan Creek Want a Piece of Troubled Crypto Lender ‘BlockFi’

Less than a week after extending a US$250 million line of credit to BlockFi, Bahamian-based exchange FTX is now in talks to acquire a stake in the beleaguered crypto lending company.

FTX’s credit line offer stood to effectively wipe out all BlockFi shareholders, including investment firm Morgan Creek Digital, the firm told its investors. For this reason, Morgan Creek – a longtime backer of BlockFi – is attempting to raise an equivalent amount from investors to purchase a majority stake in the troubled lender, according to a leaked investor call.

VC Funds Line Up to Help Bail Out BlockFi

While Morgan Creek has declined to comment on the move, multiple venture capital funds are said to be exploring ways to provide equity financing to BlockFi as the lender struggles to stay afloat, according to an insider.

Morgan Creek managing partner Mark Yusko did reveal via the leaked call that BlockFi founders Zac Prince and Flori Marquez had good reason to accept FTX’s terms. Of the several emergency financing offers BlockFi had received, FTX’s was the only one that would not subordinate client assets to the rescuer:

Deal Just Days Away

Yusko also revealed on the leaked call that FTX and BlockFi were “probably three days away from signing a definitive agreement”. The outcome may prove to be the only bright light in what’s been a bleak month for BlockFi – and crypto in general – with Prince announcing in a June 14 tweet that “roughly 20 percent” of its workforce would be let go in the wake of the current market slump.