Sam Bankman-Fried rescues crypto lenders BlockFi, Voyager

Without any central bank willing to come to the rescue, besieged crypto-companies turn to their colleagues for help.

The billionaire’s crypto manager Sam Bankman-Fried’s companies have signed agreements to save two companies in the same number of weeks: BlockFi, a quasi-bank, and Voyager Digital, a brokerage house for digital assets.

FTX, Bankman-Peace’s cryptocurrency exchange, on Tuesday agreed to give BlockFi a revolving credit facility of $ 250 million. Bankman-Fried said the funding would help BlockFi “navigate the market from a position of strength.”

“We take our duty to protect the digital asset ecosystem and its customers seriously,” he tweeted.

This comes after BlockFi said earlier this month that they would lay off 20% of employees. Meanwhile, a report from The Block said earlier this month that BlockFi was in talks to raise funds in a deal that values ​​the company at $ 1 billion, down from $ 3 billion last year.

Zac Prince, co-founder and CEO of BlockFi, said the agreement with FTX was more than just a debt round, adding that it “also unlocks future collaboration and innovation” between the two companies.

Last week, Voyager Digital said that Alameda Research, Bankman-Peace’s quantitative analysis firm, would provide $ 500 million in funding.

The deal consists of a $ 200 million line of cash and USDC stablecoins, as well as a separate 15,000-bitcoin revolving facility worth approximately $ 300 million at current rates.

A dip in the value of digital currencies in recent weeks has led to many key players in the area experiencing financial difficulties.

Bitcoin and other cryptocurrencies are falling sharply as the market struggles with Federal Reserve rate hikes and the $ 60 billion collapse of terraUSD, a so-called stablecoin, and its sister token luna.

Last week, cryptocurrency lender Celsius halted all bank withdrawals, blaming “extreme market conditions.” The company, which takes users’ crypto and lends it out to provide higher returns, is believed to have tied up hundreds of millions of dollars in an illiquid token derivative called stETH.

Elsewhere, the crypto hedge fund Three Arrows Capital has been forced to phase out mortgages on various tokens, according to the Financial Times.

On Wednesday, Voyager revealed the extent of the damage caused by 3AC’s problems.

The company said it was set to take a loss of $ 660 million on loans issued to 3AC if the company fails to pay. 3AC had borrowed 15,250 bitcoins – worth around $ 310 million as of Wednesday – and $ 350 million in USDC stablecoins.

3AC requested an initial repayment of $ 25 million in USDC by June 24 and full repayment of the full balance of USDC and bitcoin by June 27, Voyager said, adding that none of the amounts have yet been repaid.

The firm said it intends to recover the funds from 3AC and is in talks with its advisers “regarding the legal remedies available.”

“The company is unable to assess at this time the amount it will be able to recover from 3AC,” said Voyager.

Voyager shares fell on the news and fell as much as 60% on Wednesday.

Zhu Su, 3AC’s co-founder, said earlier that his company was considering selling assets and rescuing another company to avoid collapse. 3AC did not respond to further requests for comment.

Bankman-Fried is one of the richest people in crypto, with an estimated net worth of $ 20.5 billion, according to Forbes. His cryptocurrency exchange FTX had a value of 32 billion dollars at the beginning of 2022.

The 30-year-old has emerged as something of a lifesaver for the $ 900 billion crypto market as it faces an ever-deepening liquidity crisis. In an interview with NPR, Bankman-Fried said he feels his exchange has a “responsibility to seriously consider going in, even if it is at a loss to ourselves, to stop the infection.”

His actions highlight how the lack of regulation for the crypto industry means that companies can not turn to the federal government for a rescue package when things turn south – a stark contrast to the banking industry in 2008.