FTX, a fast-growing crypto exchange operated by Sam Bankman-Fried, may purchase an equity stake in BlockFi, one of the most successful digital asset companies in the US.
BlockFi offers both trading in crypto as well as complementary services such as a wallet, credit cards, crypto lending, and a yield service. BlockFi caters to both institutions and individual investors.
Recently, as crypto contagion started to spread across the ecosystem, Bankman-Fried stepped in to backstop several firms. BlockFi, hit with liquidity concerns, received a $250 million line of credit from FTX to stave off a possible run on the firm.
As was reported, BlockFi founder and CEO Zac Prince said the credit facility was intended to serve its clients and ensure all funds are safeguarded.
Bankman-Fried explained they were acting to help BlockFi “navigate the market from a position of strength” adding that “sometimes leadership means acting decisively and that’s what BlockFi did: removing troublesome counterparties _before_ they become a problem, and adding cash _before_ it was necessary.”
Today, a report by WSJ.com states that people with knowledge of the matter say the two firms are discussing FTX purchasing equity in BlockFi for an undetermined amount of ownership.
Bankman-Fried has evolved into the Crypto Fed in a way, acting as the lender of last resort similar to the Federal Reserve. Bankman-Fried and his companies have purchased, invested in, or providing capital to, multiple Fintechs beyond BlockFi. Voyager, a publicly-traded company, recently received a credit facility from Alameda Ventures, a company controlled by Bankman-Fried. Earlier this year, Bankman-Fried invested in Robinhood. There are others.
While Bankman-Fried has been committing hundreds of millions of dollars to invest in digital asset companies, don’t worry about his bank account diminishing as his estimated net worth has been pegged at around $24 billion.