Cryptocurrency investment company Morgan Creek Digital, a BlockFi shareholder, is taking active steps to counter the FTX takeover of the lending firm.
After cryptocurrency exchange FTX announced it would provide BlockFi with a $250 million credit line, Morgan Creek came up with a plan, the details of which have yet to be disclosed. However, several venture capital funds are known to be exploring ways to provide equity funding to BlockFi.
According to Morgan Creek CEO Mark Yusko, FTX’s seemingly altruistic offer of bailouts and a line of credit poses a danger to BlockFi shareholders as it gives the exchange an opportunity to buy out a majority stake “at virtually zero price.”
“If FTX exercises this option, it will effectively wipe out all of BlockFi’s existing shareholders, including management and employees with stock options, as well as all equity investors in the company’s previous venture rounds,” Yusko said.
In mid-June, the credit service BlockFi faced liquidity problems and announced a massive reduction in staff. A few days later, BlockFi CEO Zac Prince announced that he had signed an agreement with FTX that would provide the company with a revolving line of credit.
Source: Bits
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