BlockFi Bailout Begins

I recently spoke about how the scammers are turning on one another, and it seems that the businesses are too, there is no love lost in shitcoins. BlockFi are clearly in distress trying to raise money in a down round to keep going and in their desperation, they've turned to FTX for a bailout.

However, the bailout doesn't come without conditions, conditions that investors in BlockFi aren't all happy with because they're not getting to cream some profit for themselves. One of those investors is Morgan Creek Capital, run by Pomp and Mark Yusko, two pretty big names in the podcast circle jerk we see going on today.

blockfibailoutbegins.png

FTX taking a chunk out of BlockFi

FTX extended a line of credit to BlockFi to keep them running however, there has been talking that with that line of credit comes an offer to buy out the shareholders of the distressed company and take equity ownership in BlockFi.

If the FTX offer is exercised after extending the credit line, FTX would buy up BlockFi for next to nothing and only investors in the most senior tranche of the company’s latest raise would get back anything, and even that would amount to pennies on the dollar.

The owners of that equity will either need to choose to eat those losses hoping they didn't have to much exposure or they'll have to match FTX's offer.

Morgan creek leak

Morgan Creek Digital is one of BlockFi’s largest investors. The firm has participated in BlockFi’s Series A through D fundraising rounds and has massive exposure to the company. If they get only pennies on the dollar for all that investment, it would be a disaster for the fund.

That's why the fund is now attempting to raise $250 million from investors to purchase a majority stake in BlockFi, instead of letting FTX take it over and clear out their equity.

This just shows how exposed institutions were during this bull run and like the previous runs before that were more retail-driven, institutions also ape'd in and bitcoin left them with egg on their faces.

Whoops pic.twitter.com/mVtP4LBtm9

— Vandelay ₿TC Industries⚡ (@VandelayBTC) June 25, 2022

CEFI showing it's not been responsible with customer funds

At the end of the day, these companies be it Celsius or BlockFi all took a massive risks with customer funds thinking that they would never have to face massive redemptions under a downturn in the market. Bitcoin running up to 69k and pulling every shitcoin and shitcoin investment with it, was more than enough to get people to take so much leverage.

Now that we're seeing these companies and their customers pay for the risks they took, we're likely going to see regulation coming our way.

As is the case with shitcoiners and shitcoin comapnies, they all about runinig it for everyone, by doing dumb shit.

Have your say

What do you good people of HIVE think?

So have at it my Jessies! If you don't have something to comment, "I am a Jessie."

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10 comments
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This bear market is making several victims. It seems to me that the strong are getting stronger and the weak are leaving

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This is far from over, there are plenty of players who are scrambling and could still get caught up in the cascading liquidations

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What regulations are needed if you are in Defi? Doesn't it go against the whole point of it!?

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Welcome to the conversation, that is the marketed point, but it is far from the truth.

Can you name a defi service that cannot be regulated?

  • If the founder is public they can be served
  • If they've accepted outside capital like VC funding then they have ties to a centralised services like banking and their LPs
  • If they have centralised stablecoins like USDC/USDT their smart contract can be blacklisted from using those assets
  • If they run their services on could provider like AWS of which most do they can be shut down

DEFI is decentralised in name only

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Oh damn. We've been sold a lie?

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Lol now you're getting it, the more you ask questions the more you'll realise how these are all fairy tales with no grounding in reality

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It’s funny watching all the bros getting fucked up after so long of them thinking their shitcoins were invincible. In some ways I feel bad for them but in others I don’t. It’s good to see the finance side getting their shit thrown around though, it’s usually those groups screwing others without any repercussions.

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Lol they all thought they were invisible and that the bull market was going on forever, mistaking leverage for genius and now reality comes to slap them in the face, as a cold storage holder this is fun to watch

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haha soon all shitcoins will be dead and your investments with it. the only thing that will stand is bitcoin and bitcoin myk. even ethereum will be gone to the dogs soon.

you know why bitcoin and bitcoin myk will stand? because none of them have to produce revenues or make any money. they only need to exist as currencies and because we're heading into the great depression.. nobody will have any money to invest even in bitcoin soon lol... so they'll have to accept free money from bitcoin myk as there will be nothing left. in any event this is all great news and all you guys invested in tehse shitcoins.. even shitcoins like hive where all your money and hope lies will draw to nothing as well.

i certainly hate to be the harbinger of bad news but if you all think this ends any other way then you all are sadly mistaken and the process will happen anyway.

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