The FTX crypto exchange is reportedly in talks to acquire a stake in the crypto-lending platform of BlockFi.
Earlier this week, FTX gave BlockFi a $250 million line of credit to bolster its balance sheet and platform strength.
FTX’s founder and CEO, Sam Bankman-Fried, is now being compared to JP Morgan, who bailed out US banks in 1907.
The Sam Bankman-Fried-led crypto exchange of FTX is reportedly in talks to acquire a stake in the crypto lending platform of BlockFi. According to a report by the Wall Street Journal, discussions between FTX and BlockFi are ongoing with no clear structure of an acquisition agreement.
FTX Had Earlier this Week Provided BlockFi with a $250M Line of Credit.
In addition, news of FTX acquiring a potential take in BlockFi comes less than a week after the exchange extended a $250 million line of credit to the latter. BlockFi’s CEO, Zac Prince, explained via Twitter that the funds would be used to provide the company with capital that bolsters the platform’s balance sheet and strength.
Mr. Prince added that the credit facility is ‘intended to be contractually subordinated to all client balances across all account types (BIA, BPY & loan collateral) and will be used as needed.’ He also pointed out that the team at BlockFi had performed in an exemplary manner through the ongoing market volatility, and the platform was committed to ensuring that client funds were safe.
Sam Bankman-Fried is the ‘JP Morgan’ of Crypto.
To note is that Alameda Research, the quantitative research firm founded by Sam Bankman-Fried, also provided Voyager Digital with $500 million in financing late last week. Voyager Digital later confirmed that it had some exposure to the recently insolvent hedge fund of Three Arrows Capital.
Therefore, it can be loosely concluded that Mr. Bankman-Fried is bailing out crypto projects that have been hit hard by the ongoing crypto market drawdown. His actions have led the crypto community and even veteran stock trader Jim Cramer to refer to him as the JP Morgan of crypto, as seen in the following tweet.
Sam Bankman-Fried doles out credit lines to save crypto institutions. He's the new JP Morgan!
This comparison of Sam Bankman-Fried to JP Morgan has its origins in the panic of 1907, when a frenzy of bank withdrawals caused a public distrust in the banking system. As a result, JP Morgan and other Wall Street bankers banded together to lend their own funds to save the United States from a devastating financial crisis.