Entries related to BlockFi

June 30, 2022

FTX reportedly approaches a deal to buy BlockFi in "fire sale"

According to CNBC, the cryptocurrency exchange FTX is hammering out the details on an agreement to acquire crypto lending platform BlockFi. Earlier in June, it was reported that FTX had agreed to lend BlockFi $250 million, bailing out the exchange after it suffered substantial losses.

BlockFi was last valued at $4.8 billion, but FTX is expected to pay around $25 million to buy the company. BlockFi CEO Zac Prince refuted what he described as a "market rumor": "I can 100% confirm that we aren't being sold for $25M." A leaked call with Morgan Creek Digital investors suggested they were trying to counter FTX's offer, and that BlockFi was being valued at less than $500 million. The call also revealed that BlockFi's loan to Three Arrows Capital had been $1 billion, and that it was backed by collateral of $1.33 billion in Bitcoin and GBTC.

CNBC reported that, according to one of their sources, "equity investors in BlockFi are 'wiped out' and are now writing off the value of their losses."

June 21, 2022

Sam Bankman-Fried performs second bailout, loaning $250 million to BlockFi

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Crypto exchange FTX loaned $250 million to BlockFi, a crypto lending platform that recently announced 20% layoffs as they struggled to weather the crypto downturn. BlockFi also had loaned funds to Three Arrows Capital, an insolvent crypto hedge fund, although they claim to have successfully liquidated 3AC's positions.

The FTX loan represents the second bailout of a crypto firm by Sam Bankman-Fried's companies, after his Alameda Research trading firm extended credit equivalent to around $485 million to floundering crypto platform Voyager.

"Crypto exchange FTX bails out lending platform BlockFi", Financial Times

June 14, 2022

BlockFi fined almost $1 million by Iowa regulators for offering unregistered securities

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The Iowa Insurance Division announced that they had levied a $943,000 fine against BlockFi for failing to register securities they offered on their platform. The regulator also accused BlockFi of making "misrepresentations and omissions about the level of risk in its loan portfolio", particularly pertaining to statements that their loans were "typically" overcollateralized when in reality only around 16–17% were.

June 13, 2022

Crypto.com and BlockFi announce layoffs

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On June 10, Crypto.com announced they would be "making targeted reductions" of 260 people, amounting to around 5% of their workforce. On June 13, BlockFi announced that they were in "the gut wrenching position of needing to reduce our headcount" by around 20%. BlockFi has around 850 staff, suggesting they plan to lay off 170 people.

These announcements followed a June 2 layoff announcement by Gemini and the announcement by Coinbase that same day that they would be rescinding already-accepted job offers.

Rumors of a downturn across the tech industry more broadly have been swirling for several months, but crypto companies appear to be being hit particularly hard as they simultaneously endure "crypto winter".

"Crypto crash wreaking havoc on DeFi protocols, CEXs", Cointelegraph

February 11, 2022

BlockFi set to pay $100 million to settle with SEC and state regulators over sketchy lending services

(attribution)

Bloomberg reported that BlockFi is preparing to pay $100 million to settle allegations from the Securities and Exchange Commission (SEC) and state regulators that it provided a service allowing people to loan their cryptocurrencies to others in exchange for high interest rates. BlockFi will also not be allowed to provide new high-yield accounts to most Americans following the settlement. BlockFi is only one of several crypto firms, including Celsius, Gemini, and Voyager Digital Ltd., who are facing scrutiny from regulators over concerns of unregistered securities sales.

"Crypto Lender BlockFi to Pay $100 Million In Settlement with SEC, States", Bloomberg

February 4, 2022

Someone tries to take out a loan against their Bitcoin holdings to get a mortgage, loses over $300,000

A prospective house-buyer wanted to pad their bank account to try to convince their bank to approve them for a mortgage. Their bank didn't consider Bitcoin holdings when evaluating a person's suitability for a mortgage (can't imagine why), and so the person decided to take out a loan on the BlockFi platform, putting up $600,000 worth of Bitcoin as collateral for a $300,000 loan. However, the borrower had bought their Bitcoin from a private source (rather than through one of the major exchanges), and it turned out the Bitcoin had previously come through a cryptocurrency mixer. Because of what BlockFi described to the borrower as "indirect mixing exposure", BlockFi called back the loan and the borrower "lost more than half of [their] BTC holdings, have a huge tax bill, and was screwed out of a fortune".

Even if things had worked out as this person planned, it seems like the bank might have wanted to know where $300,000 suddenly came from, and I don't know how "I took out a sketchy loan against my Bitcoin holdings, which you already don't think can qualify me for a mortgage" would have shaken out.

"Blockfi Horrible Loan Experience (FORTUNE Lost)" on r/CryptoCurrency