Bankman-Fried steps in again to bail out crypto lender BlockFi

abdelaziz Fathi

FTX is reportedly looking to acquire a stake in the beleaguered crypto lender BlockFi as concern increases across the industry about liquidity in the wake of the recent collapse in prices.

FTX

The news, first reported by The Wall Street Journal, comes hot on the heels of Bankman-Fried’s decision to provide a $250 million credit line for BlockFi.

Through the other company he controls, Alameda Research, the crypto billionaire also stepped in to bail out Canadian crypto broker Voyager Digital. The latter revealed that its exposure to the Three Arrows Capital (3AC) is at a staggering $660 million.

“BlockFi does not comment on market rumors. We are still negotiating the terms of the deal and cannot share more information at this time. We anticipate sharing more on the terms of the deal with the public at a later date,” a BlockFi spokesperson told CoinDesk when asked about the report.

Sam Bankman-Fried is trying to help the stumbling crypto industry with many bailouts of struggling firms announced this month to pull them back from the brink.

The new investment comes as BlockFi tries to restore confidence during a period of accelerating pressure after rivals Celsius Networks and Babel Finance froze withdrawals and transfers. Although the crypto lender is still satisfying withdrawal requests and fulfilling increased demand from institutional borrowers, it was cutting staff by roughly 20%.

BlockFi announced deep layoffs amid a brutal bear market and also liquidated a large client’s overcollateralized margin loan to mitigate risk. it joins major cryptocurrency exchanges like Gemini, Coinbase, and Crypto.com in workforce cuts.

On the regulatory front, the Iowa watchdog hit BlockFi with a $1 million fine to settle charges of offering unlicensed interest-bearing accounts for retail investors. Several state regulators in the US have already issued cease and desist notices to BlockFi, which claims over $10 billion in client assets. This coordinated regulatory scrutiny hinged on the firm’s crypto savings and loans product, dubbed BlockFi Interest Accounts (BIAs).

Earlier this year, BlockFi agreed to pay a $50 million penalty to the SEC and additional $50 million in fines to 32 states to settle similar charges. The company and its parent also agreed to cease selling its Interest Accounts, which let users earn returns on cryptocurrencies, and attempt to register their business within 60 days.

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