var TRINITY_TTS_WP_CONFIG={“cleanText”:”Sam Bankman-Fried on brink of kajillionth bailout for crooked u2018cryptou2019 platforms.u23f8The struggling u2018cryptou2019 sector hopes to avoid having fun staying poor by embracing financial bailouts the same way that a drowning man grabs the point of a sword.u23f8The fate of BlockFi continues to hang in the balance after a wild week of efforts to rescue the struggling digital currency lending platform. BlockFi found itself on shaky foundations as the overall market struggles from a lack of liquidity thanks to overly interconnected major lending platforms and suspect stablecoins.u23f8Last week, BlockFi announced that it had arrangedu2014but not finalizedu2014a $250 million credit facility with cryptocurrency exchange FTX. BlockFi CEO Zac Prince claimed the deal u201creinforces the commitment that BlockFi has to serving its clients and ensuring their funds are safeguarded.u201d A few days later, the Wall Street Journal reported that FTX was in talks to acquire a significant stake in BlockFi.u23f8Crucially, the original announcement stated that the $250 million was u201cintended to be contractually subordinate to all client balances across all account types,u201d meaning that customers would be first in line for a share of that cash should BlockFi go busto. That would put BlockFiu2019s major investors at the back of the bus, an inversion of the status quo that the blue-chip types werenu2019t about to take lying down.u23f8On Sunday, media outlets reported that digital currency investment firm Morgan Creek Digital was looking to raise its own $250 million to take a controlling stake in BlockFi. Morgan Creek managing partner Mark Yusko reportedly told investors that FTXu2019s offer included an option to allow the exchange to acquire BlockFi u201cat essentially zero price,u201d effectively kicking Morgan Creek and other existing backers to the curb without anything to show for their investment.u23f8Yusko, who founded Morgan Creek Digital alongside Jason Williams and Anthony Pompliano in 2018, appeared skeptical as to the fundu2019s ability to raise the necessary cash to preserve Morgan Creeku2019s stake in BlockFi, suggesting there was only a u201c10% possibilityu201d of finding wealthy saps willing to throw more good money after bad.u23f8Yusko has a hedge fund history that dates back to the 1990s, having served as chief investment officer for The Endowment Fund, a partnership between his Morgan Creek Capital Management and Salient Partners LP. Yusko was ultimately turfed from that role due to poor performance and the Fund ended up limiting investor withdrawalsu2014sound familiar?u2014following a series of major redemptions. Future redemptions were allowed at significant haircuts. Clearly, Yusko would prefer that his firm isnu2019t subjected to such shoddy treatment should FTX acquire BlockFi.u23f8SBF Morgan to the rescueu23f8BlockFi hasnu2019t had the best start to the year, which began with the company paying a $100 million penalty to resolve U.S. state and federal probes into its unregistered lending products. Earlier this month, BlockFi sacked 20% of its staff due to u2018market conditionsu2019 and conducted a funding round that valued the company at $1 billion, only one-third of the companyu2019s supposed valuation one year earlier.u23f8Morgan Creeku2019s self-interested motivation in a BlockFi bailout is obvious. Itu2019s less apparent the benefit that FTX and founder Sam Bankman-Fried (SBF) hope to derive from bailing out a company that doesnu2019t appear to have exercised much in the way of sound judgment at multiple stops along its path to insolvency.u23f8FTX/SBF are proving to be the bailer-outers of last resort for many troubled crypto projects. In February, FTX acquired the Liquid Group, just a year after FTX loaned the Japanese exchange $120 million because Liquidu2019s digital wallets were hacked. SBF also took a 7.6% stake in Robinhood, the platform that helped popularize retail crypto trading in the most recent bubble, but which posted a net loss of $3.7 billion in 2021. (This week, SBF denied rumors that FTX was about to acquire Robinhood outright.)u23f8Earlier this month, Alameda Researchu2014the FTX market-maker that was also founded by SBFu2014provided a revolving line of credit worth over $500 million in a combination of cash/USDC stablecoins/BTC tokens to yet another struggling digital currency lending platform, Voyager Digital, which announced Monday that crypto hedge fund Three Arrows Capital (3AC) had defaulted on a $670 million loan.u23f8SBFu2019s willingness to open his wallet to bail out unrelated companies has led to comparisons with J.P. Morgan, who in 1907 personally injected liquidity to stem the so-called Bankersu2019 Panic, thereby preventing a complete collapse of the New York Stock Exchange. The crisis ultimately led to the creation of the Federal Reserve, that fiscal bugaboo of many a crypto libertarian.u23f8Morganu2019s apparent capacity to singlehandedly rescue the U.S. economy inevitably brought criticism as well as praise, and SBF may well be approaching that inflection point. Itu2019s worth noting that SBF has so far not seen fit to rescue Celsius customers from what appears to be certain disaster. Earlier this month, SBF felt compelled to tweet his denial of a popular conspiracy theory that FTX had willfully contributed to Celsiusu2019 dramatic collapse.u23f8Effective self-preservationu23f8As far as his proven interventions, SBF told NPR that u201cwe have a responsibility to seriously consider stepping in, even if it is at a loss to ourselves, to stem contagion. Even if we werenu2019t the ones who caused it, or werenu2019t involved in it u2026 I want to do what can help [the crypto sector] grow and thrive.u201d However, a less noble quote from earlier in the NPR report may signal SBFu2019s true motivation. u201cPeople with money are scared.u201du23f8Those scared people likely include SBF, whose exchange has made billions pumping shitcoins and offering leverage trades as high as 100x (before abruptly capping this at 20x last summer to avoid further regulatory scrutiny). In other words, SBF has been preying on the same get-rich-quick desires that somehow convinced legions of suckers that crypto lending platforms could legitimately offer 20% annual returns.u23f8SBF also publicly admitted that DeFi was essentially a Ponzi scheme yet saw no contradiction between that admission and FTXu2019s willingness to list the tokens that fueled these DeFi platforms. Thereu2019s also the fact that Alameda is one of the largest recipients of the scam stablecoin Tether, without which the past two BTC bubbles would never have occurred.u23f8SBF has long proclaimed that heu2019s a devotee of u2018effective altruism,u2019 whose practitioners need to get stupidly rich before unleashing their wealth in a manner that effects true change. But despite SBFu2019s wealth already being measured in the double-digit billions, that magical day when he sheds his capitalist skin and reveals his true altruistic form remains a mirage on the horizon.u23f8Itu2019s almost as if an altruistic Sean Parker type sat SBF down one day and said: u2018A billion dollars isnu2019t cool. You know whatu2019s cool? A trillion dollars.u2019 SBFu2019s not there yet, so it wouldnu2019t be prudent to swap his black hat for a white one. In the meantime, donu2019t question SBFu2019s motives for propping up the Crypto Crime Cartel, because heu2019s doing it for the kids.u23f8Weu2019ll close on the truly rich note that since SBF hasnu2019t seen fit to intervene, the fate of Celsius may lie with none other than Goldman Sachs. The Wall Street titan is reportedly looking to raise up to $2 billion to acquire the troubled lendersu2019 assetsu2014what assets, we hear you cryu2014in the event of a bankruptcy filing.u23f8Remember the headline that Satoshi inscribed in Bitcoinu2019s Genesis block? Something about yet another bailout for some financial institutionsu2014like Goldman Sachsu2014that got themselves in a mess of trouble by gambling recklessly with their customersu2019 funds? When the entities that you so brutally mocked are now the ones hauling your ass out of the fire, itu2019s time to pack it in, crypto kiddies.u23f8Watch: BSV Global Blockchain Convention panel, The Future of Digital Asset Exchanges & Investmentu23f8https://www.youtube.com/watch?v=RzJsCRb6zt8&t=7800su23f8Followu00a0u2019s Crypto Crime Cartelu00a0series, which delves into the stream of groups fromu00a0BitMEXu00a0tou00a0Binance,u00a0Bitcoin.com,u00a0Blockstream,u00a0ShapeShift,u00a0Coinbase,u00a0Ripple,u23f8 Ethereum,u00a0FTXu00a0andu00a0Tetheru2014who have co-opted the digital asset revolution and turned the industry into a minefield for nau00efve (and even experienced) players in the market.u23f8″,”headlineText”:”Sam Bankman-Fried on brink of kajillionth bailout for crooked u2018cryptou2019 platforms”,”articleText”:”The struggling u2018cryptou2019 sector hopes to avoid having fun staying poor by embracing financial bailouts the same way that a drowning man grabs the point of a sword.u23f8The fate of BlockFi continues to hang in the balance after a wild week of efforts to rescue the struggling digital currency lending platform. BlockFi found itself on shaky foundations as the overall market struggles from a lack of liquidity thanks to overly interconnected major lending platforms and suspect stablecoins.u23f8Last week, BlockFi announced that it had arrangedu2014but not finalizedu2014a $250 million credit facility with cryptocurrency exchange FTX. BlockFi CEO Zac Prince claimed the deal u201creinforces the commitment that BlockFi has to serving its clients and ensuring their funds are safeguarded.u201d A few days later, the Wall Street Journal reported that FTX was in talks to acquire a significant stake in BlockFi.u23f8Crucially, the original announcement stated that the $250 million was u201cintended to be contractually subordinate to all client balances across all account types,u201d meaning that customers would be first in line for a share of that cash should BlockFi go busto. That would put BlockFiu2019s major investors at the back of the bus, an inversion of the status quo that the blue-chip types werenu2019t about to take lying down.u23f8On Sunday, media outlets reported that digital currency investment firm Morgan Creek Digital was looking to raise its own $250 million to take a controlling stake in BlockFi. Morgan Creek managing partner Mark Yusko reportedly told investors that FTXu2019s offer included an option to allow the exchange to acquire BlockFi u201cat essentially zero price,u201d effectively kicking Morgan Creek and other existing backers to the curb without anything to show for their investment.u23f8Yusko, who founded Morgan Creek Digital alongside Jason Williams and Anthony Pompliano in 2018, appeared skeptical as to the fundu2019s ability to raise the necessary cash to preserve Morgan Creeku2019s stake in BlockFi, suggesting there was only a u201c10% possibilityu201d of finding wealthy saps willing to throw more good money after bad.u23f8Yusko has a hedge fund history that dates back to the 1990s, having served as chief investment officer for The Endowment Fund, a partnership between his Morgan Creek Capital Management and Salient Partners LP. Yusko was ultimately turfed from that role due to poor performance and the Fund ended up limiting investor withdrawalsu2014sound familiar?u2014following a series of major redemptions. Future redemptions were allowed at significant haircuts. Clearly, Yusko would prefer that his firm isnu2019t subjected to such shoddy treatment should FTX acquire BlockFi.u23f8SBF Morgan to the rescueu23f8BlockFi hasnu2019t had the best start to the year, which began with the company paying a $100 million penalty to resolve U.S. state and federal probes into its unregistered lending products. Earlier this month, BlockFi sacked 20% of its staff due to u2018market conditionsu2019 and conducted a funding round that valued the company at $1 billion, only one-third of the companyu2019s supposed valuation one year earlier.u23f8Morgan Creeku2019s self-interested motivation in a BlockFi bailout is obvious. Itu2019s less apparent the benefit that FTX and founder Sam Bankman-Fried (SBF) hope to derive from bailing out a company that doesnu2019t appear to have exercised much in the way of sound judgment at multiple stops along its path to insolvency.u23f8FTX/SBF are proving to be the bailer-outers of last resort for many troubled crypto projects. In February, FTX acquired the Liquid Group, just a year after FTX loaned the Japanese exchange $120 million because Liquidu2019s digital wallets were hacked. SBF also took a 7.6% stake in Robinhood, the platform that helped popularize retail crypto trading in the most recent bubble, but which posted a net loss of $3.7 billion in 2021. (This week, SBF denied rumors that FTX was about to acquire Robinhood outright.)u23f8Earlier this month, Alameda Researchu2014the FTX market-maker that was also founded by SBFu2014provided a revolving line of credit worth over $500 million in a combination of cash/USDC stablecoins/BTC tokens to yet another struggling digital currency lending platform, Voyager Digital, which announced Monday that crypto hedge fund Three Arrows Capital (3AC) had defaulted on a $670 million loan.u23f8SBFu2019s willingness to open his wallet to bail out unrelated companies has led to comparisons with J.P. Morgan, who in 1907 personally injected liquidity to stem the so-called Bankersu2019 Panic, thereby preventing a complete collapse of the New York Stock Exchange. The crisis ultimately led to the creation of the Federal Reserve, that fiscal bugaboo of many a crypto libertarian.u23f8Morganu2019s apparent capacity to singlehandedly rescue the U.S. economy inevitably brought criticism as well as praise, and SBF may well be approaching that inflection point. Itu2019s worth noting that SBF has so far not seen fit to rescue Celsius customers from what appears to be certain disaster. Earlier this month, SBF felt compelled to tweet his denial of a popular conspiracy theory that FTX had willfully contributed to Celsiusu2019 dramatic collapse.u23f8Effective self-preservationu23f8As far as his proven interventions, SBF told NPR that u201cwe have a responsibility to seriously consider stepping in, even if it is at a loss to ourselves, to stem contagion. Even if we werenu2019t the ones who caused it, or werenu2019t involved in it u2026 I want to do what can help [the crypto sector] grow and thrive.u201d However, a less noble quote from earlier in the NPR report may signal SBFu2019s true motivation. u201cPeople with money are scared.u201du23f8Those scared people likely include SBF, whose exchange has made billions pumping shitcoins and offering leverage trades as high as 100x (before abruptly capping this at 20x last summer to avoid further regulatory scrutiny). In other words, SBF has been preying on the same get-rich-quick desires that somehow convinced legions of suckers that crypto lending platforms could legitimately offer 20% annual returns.u23f8SBF also publicly admitted that DeFi was essentially a Ponzi scheme yet saw no contradiction between that admission and FTXu2019s willingness to list the tokens that fueled these DeFi platforms. Thereu2019s also the fact that Alameda is one of the largest recipients of the scam stablecoin Tether, without which the past two BTC bubbles would never have occurred.u23f8SBF has long proclaimed that heu2019s a devotee of u2018effective altruism,u2019 whose practitioners need to get stupidly rich before unleashing their wealth in a manner that effects true change. But despite SBFu2019s wealth already being measured in the double-digit billions, that magical day when he sheds his capitalist skin and reveals his true altruistic form remains a mirage on the horizon.u23f8Itu2019s almost as if an altruistic Sean Parker type sat SBF down one day and said: u2018A billion dollars isnu2019t cool. You know whatu2019s cool? A trillion dollars.u2019 SBFu2019s not there yet, so it wouldnu2019t be prudent to swap his black hat for a white one. In the meantime, donu2019t question SBFu2019s motives for propping up the Crypto Crime Cartel, because heu2019s doing it for the kids.u23f8Weu2019ll close on the truly rich note that since SBF hasnu2019t seen fit to intervene, the fate of Celsius may lie with none other than Goldman Sachs. The Wall Street titan is reportedly looking to raise up to $2 billion to acquire the troubled lendersu2019 assetsu2014what assets, we hear you cryu2014in the event of a bankruptcy filing.u23f8Remember the headline that Satoshi inscribed in Bitcoinu2019s Genesis block? Something about yet another bailout for some financial institutionsu2014like Goldman Sachsu2014that got themselves in a mess of trouble by gambling recklessly with their customersu2019 funds? When the entities that you so brutally mocked are now the ones hauling your ass out of the fire, itu2019s time to pack it in, crypto kiddies.u23f8Watch: BSV Global Blockchain Convention panel, The Future of Digital Asset Exchanges & Investmentu23f8https://www.youtube.com/watch?v=RzJsCRb6zt8&t=7800su23f8Followu00a0u2019s Crypto Crime Cartelu00a0series, which delves into the stream of groups fromu00a0BitMEXu00a0tou00a0Binance,u00a0Bitcoin.com,u00a0Blockstream,u00a0ShapeShift,u00a0Coinbase,u00a0Ripple,u23f8 Ethereum,u00a0FTXu00a0andu00a0Tetheru2014who have co-opted the digital asset revolution and turned the industry into a minefield for nau00efve (and even experienced) players in the market.u23f8″,”metadata”:{“author”:”Steven Stradbrooke”},”pluginVersion”:”5.7.1″}; |
The struggling ‘crypto’ sector hopes to avoid having fun staying poor by embracing financial bailouts the same way that a drowning man grabs the point of a sword.
The fate of BlockFi continues to hang in the balance after a wild week of efforts to rescue the struggling digital currency lending platform. BlockFi found itself on shaky foundations as the overall market struggles from a lack of liquidity thanks to overly interconnected major lending platforms and suspect stablecoins.
Last week, BlockFi announced that it had arranged—but not finalized—a $250 million credit facility with cryptocurrency exchange FTX. BlockFi CEO Zac Prince claimed the deal “reinforces the commitment that BlockFi has to serving its clients and ensuring their funds are safeguarded.” A few days later, the Wall Street Journal reported that FTX was in talks to acquire a significant stake in BlockFi.
Crucially, the original announcement stated that the $250 million was “intended to be contractually subordinate to all client balances across all account types,” meaning that customers would be first in line for a share of that cash should BlockFi go busto. That would put BlockFi’s major investors at the back of the bus, an inversion of the status quo that the blue-chip types weren’t about to take lying down.
On Sunday, media outlets reported that digital currency investment firm Morgan Creek Digital was looking to raise its own $250 million to take a controlling stake in BlockFi. Morgan Creek managing partner Mark Yusko reportedly told investors that FTX’s offer included an option to allow the exchange to acquire BlockFi “at essentially zero price,” effectively kicking Morgan Creek and other existing backers to the curb without anything to show for their investment.
Yusko, who founded Morgan Creek Digital alongside Jason Williams and Anthony Pompliano in 2018, appeared skeptical as to the fund’s ability to raise the necessary cash to preserve Morgan Creek’s stake in BlockFi, suggesting there was only a “10% possibility” of finding wealthy saps willing to throw more good money after bad.
Yusko has a hedge fund history that dates back to the 1990s, having served as chief investment officer for The Endowment Fund, a partnership between his Morgan Creek Capital Management and Salient Partners LP. Yusko was ultimately turfed from that role due to poor performance and the Fund ended up limiting investor withdrawals—sound familiar?—following a series of major redemptions. Future redemptions were allowed at significant haircuts. Clearly, Yusko would prefer that his firm isn’t subjected to such shoddy treatment should FTX acquire BlockFi.
SBF Morgan to the rescue
BlockFi hasn’t had the best start to the year, which began with the company paying a $100 million penalty to resolve U.S. state and federal probes into its unregistered lending products. Earlier this month, BlockFi sacked 20% of its staff due to ‘market conditions’ and conducted a funding round that valued the company at $1 billion, only one-third of the company’s supposed valuation one year earlier.
Morgan Creek’s self-interested motivation in a BlockFi bailout is obvious. It’s less apparent the benefit that FTX and founder Sam Bankman-Fried (SBF) hope to derive from bailing out a company that doesn’t appear to have exercised much in the way of sound judgment at multiple stops along its path to insolvency.
FTX/SBF are proving to be the bailer-outers of last resort for many troubled crypto projects. In February, FTX acquired the Liquid Group, just a year after FTX loaned the Japanese exchange $120 million because Liquid’s digital wallets were hacked. SBF also took a 7.6% stake in Robinhood, the platform that helped popularize retail crypto trading in the most recent bubble, but which posted a net loss of $3.7 billion in 2021. (This week, SBF denied rumors that FTX was about to acquire Robinhood outright.)
Earlier this month, Alameda Research—the FTX market-maker that was also founded by SBF—provided a revolving line of credit worth over $500 million in a combination of cash/USDC stablecoins/BTC tokens to yet another struggling digital currency lending platform, Voyager Digital, which announced Monday that crypto hedge fund Three Arrows Capital (3AC) had defaulted on a $670 million loan.
SBF’s willingness to open his wallet to bail out unrelated companies has led to comparisons with J.P. Morgan, who in 1907 personally injected liquidity to stem the so-called Bankers’ Panic, thereby preventing a complete collapse of the New York Stock Exchange. The crisis ultimately led to the creation of the Federal Reserve, that fiscal bugaboo of many a crypto libertarian.
Morgan’s apparent capacity to singlehandedly rescue the U.S. economy inevitably brought criticism as well as praise, and SBF may well be approaching that inflection point. It’s worth noting that SBF has so far not seen fit to rescue Celsius customers from what appears to be certain disaster. Earlier this month, SBF felt compelled to tweet his denial of a popular conspiracy theory that FTX had willfully contributed to Celsius’ dramatic collapse.
Effective self-preservation
As far as his proven interventions, SBF told NPR that “we have a responsibility to seriously consider stepping in, even if it is at a loss to ourselves, to stem contagion. Even if we weren’t the ones who caused it, or weren’t involved in it … I want to do what can help [the crypto sector] grow and thrive.” However, a less noble quote from earlier in the NPR report may signal SBF’s true motivation. “People with money are scared.”
Those scared people likely include SBF, whose exchange has made billions pumping shitcoins and offering leverage trades as high as 100x (before abruptly capping this at 20x last summer to avoid further regulatory scrutiny). In other words, SBF has been preying on the same get-rich-quick desires that somehow convinced legions of suckers that crypto lending platforms could legitimately offer 20% annual returns.
SBF also publicly admitted that DeFi was essentially a Ponzi scheme yet saw no contradiction between that admission and FTX’s willingness to list the tokens that fueled these DeFi platforms. There’s also the fact that Alameda is one of the largest recipients of the scam stablecoin Tether, without which the past two BTC bubbles would never have occurred.
SBF has long proclaimed that he’s a devotee of ‘effective altruism,’ whose practitioners need to get stupidly rich before unleashing their wealth in a manner that effects true change. But despite SBF’s wealth already being measured in the double-digit billions, that magical day when he sheds his capitalist skin and reveals his true altruistic form remains a mirage on the horizon.
It’s almost as if an altruistic Sean Parker type sat SBF down one day and said: ‘A billion dollars isn’t cool. You know what’s cool? A trillion dollars.’ SBF’s not there yet, so it wouldn’t be prudent to swap his black hat for a white one. In the meantime, don’t question SBF’s motives for propping up the Crypto Crime Cartel, because he’s doing it for the kids.
We’ll close on the truly rich note that since SBF hasn’t seen fit to intervene, the fate of Celsius may lie with none other than Goldman Sachs. The Wall Street titan is reportedly looking to raise up to $2 billion to acquire the troubled lenders’ assets—what assets, we hear you cry—in the event of a bankruptcy filing.
Remember the headline that Satoshi inscribed in Bitcoin’s Genesis block? Something about yet another bailout for some financial institutions—like Goldman Sachs—that got themselves in a mess of trouble by gambling recklessly with their customers’ funds? When the entities that you so brutally mocked are now the ones hauling your ass out of the fire, it’s time to pack it in, crypto kiddies.
Watch: BSV Global Blockchain Convention panel, The Future of Digital Asset Exchanges & Investment
Follow Crypto Crime Cartel series, which delves into the stream of groups from BitMEX to Binance, Bitcoin.com, Blockstream, ShapeShift, Coinbase, Ripple,
Ethereum, FTX and Tether—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.
New to blockchain? Check out ’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.