These Crypto Investors Are About To Be Wiped Out 🚨
Today we are looking at something absolutely ruthless in the cryptocurrency market. Now were not going to look at the market too much look at pricing and liquidations, and that kind of thing i think, todays a good break and to really dive deeper into one specific thing. Thats happening right now and its its not good, depending on who you are and its not luna its, not celsius, its, not three euros capital. It is block fi and a company thats trying to raise money so that they dont get completely wiped out and have their investment in block by erased, because morgan creek is now trying to counter ftxs bailout and its actually really interesting. I read through the article and i want to really take you through every single step in it because it is fascinating. Now today we are closing the week it looks like were in the green so far, but typically we get a dump or a pump into the weekly close, and we are still under that 200 week, moving average, which is going to be interesting to see. Do we pop back above that right now we are seeing some kind of meme coins pushing up. So if some people are thinking, maybe we have further to go down if something like dogecoin is pumping 13 in this kind of market. Now there are links to a lot of things down underneath the video in case you want to join the patreon and see what im buying and selling or in case you want to sign up with ftx, for example, thats, underneath the video as well.
I do want to say too, if you dont mind hitting the like button and subscribe button that does help out the channel. Now i have covered this a little bit already. That ftx was going to offer a 250 million dollar credit facility to block five. I thought that was interesting, uh that they didnt just try to buy out part of the company and then just a few days after i covered this credit facility. It leaked that they are trying to buy part of the company. Now, sam bankman freed and ftx are absolutely ruthless when it comes to crypto in and trying to increase their dominance, and some people dont like that. Some people think some of the stuff that they do is kind of shady. I personally think that anything is really fair game in business as long as its not legal – and this is not illegal – they are just a company that has a really good cash balance and has a lot of clients and has a lot of profitability and are growing Like crazy, like they are gaining market share all the time, and they now are in a much stronger position than some of these smaller players like block fi like voyager, and it sounds like theyre going to wipe out prior block five shareholders. Now i i just want to walk through this, so cryptocurrency investment for morgan, creek digital is attempting to raise 250 million dollars from investors to purchase a majority stake in crypto, lender block fight, and this is coming from a leaked investor call from tuesday now, just in Case you dont know who morgan creek is mark yusuko or yusko.
Uh youve probably seen him around. He talks about crypto a decent amount, hes pretty bullish. He is the one that kind of leads us and then pomp is also a major investor. I believe as well and i believe, hes a co founder in morgan, creek digital. They talk more about it in a bit but uh and anthony pompliano. If you havent seen his channel, you should definitely check it out. Hes been in the space for a long time. Now this this whole story is a good explanation or a good reminder to take profits and not to get too greedy in a bull market, because when we hit bear markets, we see really crazy valuations on companies and we see valuations just plummet and thats. The same thing with like a recession and it doesnt have to be just crypto, but if we go through a recession, same thing could happen with normal businesses. They could have not as great a cash balance for a variety of reasons. Maybe they lose a big client. Maybe theyre just not ready for a recession or for a difficult time. Maybe they got a little bit too greedy or try to expand too much and they can be in a really tough spot and you can get some deals there as well, so thats just something to pay attention to thats. Another good reason to hold cash and it hurts in a bull market, because everyone tells you that cash is trash and that you shouldnt hold cash because its just its just being inflated away and ive gone back and forth with it, but this bear market.
I did really collect a lot of cash going into it and its its gone well so far, because im able to dollar cost average, but back to this morgan, crete, morgan creeks plan to assemble an equity offer was hatched in response to uh the crypto exchange ftxs Tuesday morning announcement they would extend a 250 million dollar credit line to block fi now part of block vice problem is: they did have that 100 million dollar fine from the sec earlier this year, which im assuming really hurt their balance sheet and to be clear, i Do work with block five, but they have not given me any information on this whole situation really outside of just whats already public, so just know that. But i think that did hurt their balance sheet a bit and probably made it more difficult for liquidity and didnt. Put them as strong in a position as they were before: morgan creek digital declined to comment. A person with knowledge of the effort said there are multiple venture capital firms, theyre, exploring ways to provide equity financing to block fight. As the lender struggles to stay afloat. They say at stake is the ability of block fish existing shareholders, including long time backer, morgan creek to recoup their investments. Morgan creek has been making calls all day to try to figure this out. According to usco, the ftx crowdline proposal had a catch for blackfys existing shareholders. It gave fdx the option to buy block fight at essentially zero price.
If ftx word exercise said option, it would affect the it would effectively wipe out all blackfys existing equity shareholders, including management and employees, with stock options, as well as all equity investors in the companys previous venture rounds. Now theyve done a lot of these venture rounds. The last one was a 350 million dollar round at a valuation of 3 billion. Now recently, it came out that they were just trying to raise money at a one billion dollar valuation and were having a hard time doing that and they were planning on doing another race. If the market didnt completely collapse and theyre gon na try to get half a billion dollars at about five billion, but obviously thats not happening right now. So, going back to this usco said on the leaked, call that block five founders – zach prince and flory mark marquez had a valid reason for preliminarily. Accepting the terms of the several emergency financing offers that they received block fi fdx was the only one that would not subordinate client assets to the rescuer. So ftx is trying to help out theyre theyre, trying to get a really good deal on block fi and trying to be able to buy out a lot of the company. It sounds like, but theyre not trying to screw over the clients, which i think is great, because obviously they have a lot of clients in their own business. They dont want to seem like someone thats willing to steal money from investors, so if they were to go bankrupt for some reason, they dont want to take their investment back before the people that have assets on the platform.
In other words, unless block 5 went with ftx, its depositors would have to wait in line behind the new lender to be repaid. Additionally, block fi has not received any equity financing options at that stage. Usco did not identify any of the other firms that proposed bailout packages for block fi. I think thats – probably a good thing just because these other firms obviously are trying to scalp and trying to basically destroy investors. Possibly if things go south, but ftx is really trying to help out the investors. They have money in block vi, but also trying to get a really good deal. Obviously it would be a pretty bad look as well. If block fi went with one of these other lenders, even if the terms were better for them, because if they did that a lot of investors would try to take funds off as soon as possible as soon as possible and thered probably be a bank run, they Would have no more money, and it would basically, i think, be the nail in the coffin that says uh, since they dont have any more money and they have a lot of. They have a lot of obligations. That would probably be the end of the company if they went with one of these other uh. One of these other financing options – and i could be wrong but thats, just kind of my thinking on it – block by ceo, prince tweeted on june 21, that the company had signed a preliminary term sheet with ftx usco told investors on the league.
Call that day, the ftx and block fi were probably three days away from signing a definitive agreement. Now, someone from block five said that theyre still negotiating the terms of the deal and cant share more information, but they plan on doing this at a later date. According to use, go on the call in the event that ftx exercised its option after extending the credit line, only investors in the most senior tranche of the companys latest raise would get anything back and even that amount would be pennies on the dollar. So all the earlier investors would be pretty much wiped out and im, not sure exactly how this would work, but thats what they say in this article, working creek, which participated in several funding rounds for block five, would be among those holding the bag. The alternative is to raise an equivalent amount, i would say its a ten percent possibility, but not zero. You score said to investors now they say that there is a possibility that they could have an in between deal where ftx and morgan creek both put up a portion of the capital. Supposedly, morgan creek has a couple investors that are willing to make 100 million dollar checks and 50 million dollar checks and theyre definitely going to pursue a joint deal. Then they talk about how pomp was a co founder of morgan creek and how they are one of the largest investors in block fight. The firm has participated in block fights series, a through d fundraising rounds, every single one yusuko cautioned that, while morgan creek was doing all it could to salvage its investment in blockfy.
Success was far from a shirt its not over, but its definitely looking dark. He says thats the power of having cash on the sidelines, and obviously this is different from what you and i are gon na do right. We dont have 250 million dollars sitting around, but you can see how powerful cash is in a bad market. This company was being valued at three billion dollars a few months ago. Now they cant be valued at one billion dollars and they cant even get enough money to secure hundreds of millions, if not billions. Overall, that theyve raised in the past 250 million dollars is all ftx needs to do to wipe out all the other investors. They just did a 350 million dollar fundraising round uh in march last year. They had other fundraising rounds that were for even more before that 50 million, 100 million, 350 million, et cetera, so 250 million can get all these clients can take over a lot of their assets and wipe out other block by shareholders. So obviously this is just another time to remember next bull market, that it is good to take profits, its really important to have cash on the sidelines now, its always a its always a tough thing, because you dont want too much cash that you cant take advantage Of future opportunities, because right now i think now is the time to be deploying, and you can see that i did a video yesterday talking about how whales were buying and its not just its, not just this, but its also uh, its also ftx helping out voyager Its also a company is trying to bail celsius and take advantage of their situation.
Its also whales, trying to buy bitcoin pretty heavily right now as well. The largest wallets are accumulating, so i think now is more of a time to be buying than a time to be selling for cash. But that tells you again just another reminder that it is really important and when things are darkest thats, when you can get unbelievable deals, because if the market returns right and everything kind of settles down the 100 million dollar, fine. That block by hat isnt. That big a deal in a bull market, but if things turn around, if fdx can buy block fi and basically take over the company, even if they get lets say 50 of the company for 250 million dollars. Well and again, this is speculation. Well, it could get back up to a three billion dollar market cap, basically where it was a year ago. They have probably more clients than they did a year ago, and if the market returns, a lot of people will get greedy want a loan against their crypto. As well and interest – and they want a credit card and stuff like that, 250 million dollars could bring them a 6x if they get back to their old valuation and they buy half the company for 250 million, and a company like morgan creek might not be able To even get 250 million in capital because they just dont have enough on the sidelines compared to ftx, and this is kind of small potatoes for ftx like this would be a good acquisition, but fdx is valued, i believe, over 30 billion.
I think its 40 billion dollars or so and sam bankman freed has a lot of money as well, big backer and solana and some other cryptos as well. So he has a lot of money himself and he could make investments like this just by himself. If he wanted to so just a friendly reminder to take profits in the next bull run, and i dont want it just to be like me talking to you to do that, i want you to remind me as well when we get back into a bull run. Comment that comment that about this right, ftxs bailout or uh, just the fact that our money is going to go a lot further. If we go through another downturn, if we have cash on the sidelines remind me to take profits along the way as well.