Cryptocurrency is an investment company Morgan Creek Digital, a BlockFi shareholder, is taking active steps to counter the FTX takeover of the lending firms.
After the cryptocurrency exchange FTX announced it would provide Blockfi with a $250 million credit line, Morgan Creek came up with a plan that has yet to be disclosed.
However, several venture capital funds are known to be exploring ways to provide equity funding to BlockFi.
According to Morgan Creek CEO Mark Yusko, FTXs seemingly generous offer of bailouts and a line of credit poses a danger to BlockFi shareholders as it gives the exchange an opportunity to buy out a majority stake “at virtually zero price.”
“If FTX exercises the option, it will effectively wipe out all of BlockFi’s existing shareholders, including management and employees with stock options, as well equity investors in the company’s previous venture rounds,” Yusko said
In mid-June, the credit service BlockFi faced liquidity problems and announced a massive reduction in staff. A few days later, BlockFi CEO Zac Prince announced that he had signed an agreement with FTX that would provide the company with a revolving line of credit.
Also, during the leaked call, Mr. Yusko floated the idea of a possible joint deal with FTX, with both entities putting up a portion of the capital to ‘bail out’ BlockFi.
“I will try to pursue a joint deal. Not that I have SBF on speed-dial, but I could probably get that call.”