Wednesday, June 12, 2024

Leaked Call Indicates Morgan Creek Is Attempting to Oppose FTX’s BlockFi Bailout.

According to a leaked phone call, Morgan Creek is planning to sabotage FTX’s attempt to extend their $250 million line of credit to BlockFi. To achieve this, the digital asset investment firm is trying to raise their own $250 million through investors. The intention is to buy out majority shares in BlockFi, a crypto lender.

On Tuesday morning FTX, a crypto exchange, announced it would extend its credit line to BlockFi. This led to Morgan Creek quickly assembling resources to outbid FTX.

The Risk to Existing Shareholders

Lenders are struggling to remain afloat. A person with information on the issue said, this is why many venture capitalists are looking for ways to provide BlockFi with equity financing. Morgan Creek did not make a comment on the issue.

If FTX extends the credit line, it would hamper the ability of existing shareholders to recover their investments. Morgan Creek is one such shareholder in BlockFi.

The managing partner of Morgan Creek Digital, Mark Yusko, spoke on the issue. According to Yusko, the FTX credit line had a bizarre deal with BlockFi. They could essentially purchase stakes for next to nothing. If the credit line deal proceeds to happen, all equity shareholders, managers and employees will suffer huge losses.

Why Would BlockFi accept FTX Extension

Yusko suggests the reason BlockFi accepted the terms preliminarily is that FTX will not give in client assets to the rescuer. None of the other emergency financing offers could provide that to BlockFi. If BlockFi goes ahead with FTX extension, its depositors will not have to wait behind the new lender in line to be paid.

Cryptured Team
Cryptured Team
The writers team at Cryptured.com is composed of passionate and experienced journalists who cover the latest developments in the crypto and blockchain space. They aim to provide accurate, unbiased and easy-to-understand news and information for their readers, as well as insights and analysis from industry experts. The writers team is always on the lookout for new and exciting stories that can help the general public learn more about the potential and challenges of these technologies.
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