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HomeMarketsSam Bankman-Fried rescues crypto lenders BlockFi, Voyager

Sam Bankman-Fried rescues crypto lenders BlockFi, Voyager

The embarrassed crypto companies are asking their peers for help as the central bank is willing to come to the rescue.

Sam Bankman-Fried, the boss of Billionaire’s crypto exchange, has signed a deal to bail out two companies, quasi-bank BlockFi and digital asset broker Voyager Digital, in a matter of weeks.

Bankman-Fried’s cryptocurrency exchange, FTX, agreed on Tuesday to provide BlockFi with a $ 250 million revolving credit line. Bankman-Fried said the funding would help BlockFi “navigate the market from a strong standpoint.”

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

After BlockFi said it would fire 20% of its staff earlier this month. Meanwhile, The Block reports that BlockFi is in talks to raise the downround to value the company for $ 1 billion, up from $ 3 billion last year.

BlockFi’s comments weren’t immediately available when CNBC contacted me.

Voyager Digital announced last week that Bankman-Fried’s quantitative research firm Alameda Research will provide $ 500 million in funding.

The transaction consists of $ 200 million in cash and a USDC stablecoin credit line and a 15,000 Bitcoin revolving facility worth about $ 300 million at current prices.

The plunge in the value of digital currencies over the last few weeks has caused many major companies in the field to face financial difficulties.

Bitcoin and other cryptocurrencies have fallen sharply as markets tackle the Federal Reserve’s interest rate hikes, the collapse of the so-called stablecoin terraUSD of $ 60 billion, and its sister token, Luna. ..

Last week, cryptocurrency lender Celsius blamed “extreme market conditions” and stopped withdrawing all accounts. Companies that take user crypto and lend it to generate higher returns are believed to be binding hundreds of millions of dollars to a illiquid token derivative called stETH.

Elsewhere, according to the Financial Times, crypto hedge fund Three Arrows Capital has been forced to liquidate leveraged bets on various tokens.

On Wednesday, Voyager revealed the extent of the damage caused by the 3AC trouble.

The company said it would lose $ 650 million on loans issued to 3AC if the company failed to pay. 3AC borrowed 15,250 Bitcoins (worth more than $ 300 million as of Wednesday) and $ 350 million USDC stablecoins.

Voyager said that 3AC requested an initial repayment of $ 25 million in USDC by June 24 and a full repayment of the full balance of USDC and Bitcoin by June 27, both amounts still repayable. He added that it wasn’t.

The company said it intends to recover funds from 3AC and is in talks with an advisor on “Available Legal Remedies.”

“At this point, we can’t assess the amount of money that can be recovered from 3AC,” Voyager said.

Voyager shares fell 60% on Wednesday, adding craters to the news.

Zhu Su, co-founder of 3AC, previously stated that his company is considering bailouts by another company to avoid selling and collapsing assets. The company did not respond to multiple requests for comment.

According to Forbes, Bankman Fried is one of the wealthiest people in cryptocurrencies with an estimated net worth of $ 20.5 billion. His crypto exchange FTX recorded a $ 32 billion valuation in early 2022.

A 30-year-old woman has emerged as the savior of the $ 900 billion crypto market as the liquidity crisis worsens. In an interview with NPR, Bankman Fried said her exchange “has a responsibility to seriously consider intervening to stop the infection, even if they lose.” She said she was feeling.

His actions emphasize that the lack of regulation on the crypto industry means that businesses cannot seek relief from the federal government when things turn south. This is in contrast to the banking industry in 2008.

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