According to a crypto news website Coindesk, a leaked call has revealed that BlockFi’s long time backer Morgan Creek Digital, is trying to raise $250 million to counter FTX’s bailout. The bailout is said to be disastrous for BlockFi’s Long time backers as it stands to wipe them out.
Morgan Creek Digital to raise $250 million to cancel out FTX’s possible acquisition.
Following BlockFi’s recent announcement where the crypto lender revealed that it had signed a term sheet with FTX to secure a $250M revolving credit facility, the firm’s shareholders are worried as this move might leave them with nothing on the acquisition of BlockFi by FTX.
According to Morgan Creek Digital managing partner Mark Yusko in the leaked call, FTX’s $250 million credit line to BlockFi gives it an advantage of buying BlockFi “at essentially zero price”. If FTX does this, other existing shareholders will have a lot to lose.
This buy if carried out by FTX will also wipe out management and employees with stock options, as well as all equity investors in the company’s previous venture rounds. However, Yusko on the leaked call, said that BlockFi founders had an appropriate reason for preliminarily agreeing to the terms.
Since BlockFi’s troubles hit, out of all the several emergency financing offers BlockFi received, FTX’s was the only one that would not subordinate client assets to the rescuer. This means, If BlockFi had refused to take FTX up on its offer, its depositors would remain unpaid for a while.
