Is FTX Saving the Crypto Industry or Taking Control of It? The derivatives-focused cryptocurrency exchange has been on the sidelines, watching everything fall apart, and finally decided to take action. Or, as the rumors say, FTX created this whole situation in their laboratories and is now buying up assets on the cheap. However, there is only circumstantial evidence for this. Salvation, on the other hand, is quite real.
The proceeds from the facility are intended to be contractually subject to all client balances across all account types (BIA, BPY and loan collateral) and will be used as needed.
— Zach Prince (@BlockFiZac) June 21, 2022
Earlier, BlockFi CEO Zach Prince tweeted, “Today, BlockFi signed an agreement with FTX to provide a $250 million revolving credit facility providing us with access to capital that further strengthens our balance sheet and platform sustainability.” For his part, FTX CEO Sam Bankman-Fried responded, “Today we are investing $250 million in BlockFi and partnering with them so they can rule the market from a position of strength.”
Sources tell me that this is common knowledge in #Crypto industry right now with Alameda (FTX) and SBF 100% trying to push through #Bitcoin price down right now to eliminate a number of market participants, including but not limited to #Celsius.
— N (@NickNew41532832) June 21, 2022
Over the past few weeks, the cryptocurrency market has been on a downward trend. The contagion effect of the Terra/Luna extinction shocked all companies, especially those offering income from cryptocurrency deposits like BlockFi and Celsius and hedge funds like Three Arrows Capital. The problems of these companies and the possible liquidation of assets, in turn, led to even more turmoil in the cryptocurrency market.
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What is an FTX endgame?
We wouldn’t know, but the exchange has put itself in a position of strength with all these moves. According to Bankman-Fried, BlockFi “successfully eliminated risk-prone counterparties proactively” and the company acted decisively, “removing troubled counterparties before they became a problem and adding cash before it became necessary.” And yes, by “problematic counterparties” he means Celsius and 3AC.
3) Sometimes leadership means decisive action, and that’s exactly what BlockFi did: took out troubled counterparties _before_ they were a problem, and added cash _before_ it became necessary.
— SBF (@SBF_FTX) June 21, 2022
For his part, Zach Prince presents this as a victory in everything. “Despite the market volatility over the past few weeks, I am incredibly proud of the way our team, platform and risk management protocols operate. Today’s landmark announcement reinforces BlockFi’s commitment to serving its customers and keeping their funds safe.” However, is $250 million enough for a company of this size? Let’s hope that’s the case, for the sake of our customers.
In any case, both companies seem to be happy to cooperate. Prince said, “This agreement also opens up opportunities for future collaboration and innovation between BlockFi and FTX as we work to accelerate prosperity around the world with crypto financial services.” On the same topic, Bankman-Fried claims that FTX is “excited to partner with BlockFi to bring industry-leading products.”
So, everything is great on the cryptocurrency front at the moment, right? However, what happens if BlockFi continues to lose money? Does FTX have a chance to buy the entire company for pennies?
SOL price chart on FTX | Source: SOL/USD on TradingView.com
Previous BlockFi Issues
In an article on the subject under consideration, Zerohedge reminds us from a recent episode in BlockFi history:
“As a reminder, BlockFi was fined $100 million this February for its high-yielding interest-bearing accounts, which the US Securities and Exchange Commission deemed security products.”
And who could forget when they issued BTC instead of stablecoins some lucky users?
“One Reddit user shared a screenshot of his bonus payment showing he received 701.4 bitcoins, which is over $24 million at the time of writing. They said they believe they were owed about $700 and that the bitcoin transaction was cancelled.”
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To the one, that, Zach Prince replied“Our team is battle-tested and has weathered many storms over the years, which only makes us stronger and more resilient as we navigate today’s market conditions.” This is the way to express it. However, what could he say about rumors that the company lost more than $285 million during the bull market?
@BlockFi income statement is very poor
It’s a hodgepodge of negative numbers, let’s figure it out togetherhttps://t.co/Kr9lhiH8AS
— otteroooo (@otteroooo) June 19, 2022
If the rumors are true, does that guarantee that their business model has failed and they won’t be able to survive the bear market? No, it’s not. However, this suggests it.
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Credit : www.newsbtc.com