Rapture #221: Down
More news on the 3AC and BlockFi front. I feel like I have been writing about these two companies for weeks now, but the fates of these two firms have serious implications for the rest of the industry. Additionally, there are some rumors I would like to relay.
Let's dive into the new headlines headlines.
3AC files for bankruptcy
$10 billion in March to bankruptcy today. A breathtaking collapse. Today, 3AC filed for Chapter 15 bankruptcy in New York. This move allows them to protect their US assets even as a liquidation continues to be carried out for their BVI (British Virgin Island) entity. Chapter 15 bankruptcy prevents creditors from further seizing anymore of the company's assets in the US.
While more news will likely come out regarding what players are affected by this bankruptcy, I think we are entering the final stages of this blow up. Honestly, I am still shocked by what happened to them.
If you want some further reading on the rise and fall of 3AC, I recommend you read Arthur Hayes' latest blog post on the topic.
BlockFi signs deal with FTX
I have been discussing the wheeling and dealing that has been happening between FTX and BlockFi for quite a few Raptures now. Finally, some resolution looks to be in sight. The CEO of BlockFi, Zac Prince, recently posted a Twitter thread outlining how they have signed a definitive agreement with FTX subject to shareholder approval.
This agreement involves FTX granting a $400 million revolving credit facility to BlockFi and that credit being subordinate to all client funds. Additionally, the agreement contains an option for FTX to acquire BlockFi at a variable price of up to $240 million based on performance triggers.
The $400 million revolving credit facility is nearly double the number that was discussed just a week or so ago. I mentioned in a previous Rapture the initial $250 million was not going to be enough to save BlockFi, and it seems the negotiators of this deal agree with that sentiment.
Even $400 million might not be enough to save BlockFi should more market turmoil incur. Still, the news is undoubtedly good and at least gives the company temporary respite.
Grayscale rejected... again
For what seems like the bagillionth time, Grayscale's application to convert its Bitcoin Trust into an ETF has been rejected. The company now seeks to sue the SEC over the rejection.
This suit might be what is needed to push the SEC to approve a Bitcoin ETF, though I doubt there is a quick resolution.
Rumors
We are definitely in the mass fear phase of this bear market, as the rumor mill continues to go wild. Many are tweeting that Kucoin is going belly up because of exposure to Anchor.
Furthermore, leading cryptographer Samczsun, who usually identifies major exploits, is tweeting out hexadecimal code indicating that he knows something now and that this knowledge he has can be validated at a future date.
Twitter is going nuts speculating over what this code could actually mean, and none of the interpretations are bullish.
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