Morgan Creek Digital plans to acquire controlling stake in BlockFi

Morgan Creek Digital is trying to raise $250 million from investors to acquire a controlling stake in the crypto-lending platform BlockFi. CoinDesk reports, citing Morgan Creek founder and CEO Mark Yusko.

A recording of Yusko’s conversation with investors, which took place on June 21, has surfaced. According to the executive, Morgan Creek’s initiative is a response to BlockFi’s agreement with the FTX exchange.

Last Tuesday, BlockFi said that his company signed a preliminary agreement with FTX to open a revolving credit facility of $250 million.

Subsequently, reports emerged about plans by the Bitcoin exchange to acquire a stake in BlockFi.

Yusko stressed that the initial agreement allows FTX to buy the lending platform “at an almost zero price.” If the exchange exercises this option, it would “clean out” existing shareholders, including management and employees with stock options, as well as venture investors.

In a statement to CoinDesk, a BlockFi spokesperson said the parties have not yet reached a final agreement and are discussing deal details.

In Yusko’s view, if FTX decides to acquire the platform after extending the credit line, only the largest investors from BlockFi’s most recent financing round would get back at least some of their money.

Morgan Creek, which has participated in several funding rounds, would find itself in a difficult position, he said.

“The only alternative is to raise an equivalent amount of capital, which is what we are working on. I would say the probability of that is 10%, but not zero. […] This isn’t the end, but the situation definitely looks bleak,” said Yusko.

He said the venture firm is not opposed to a joint deal with FTX, in which both sides would take equity.

According to Yusko, he has spoken with a potential lead investor who could write a $100 million check, as well as two other interested parties willing to contribute up to $50 million.

Earlier reports said Goldman Sachs to raise $2 billion to buy Celsius Network assets in the event of bankruptcy.

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