A Leaked Investor Call Revealed Morgan Creek’s Bid for BlockFi

Jun 30,2022
KingData News: A leaked recording from the call revealed that Morgan Creek was attempting to rapidly assemble $250 million in cash to purchase a majority stake in BlockFi. Morgan Creek led BlockFi's $50 million series C fundraising round, which closed in August of 2020. The proposed funding round would value BlockFi at less than $500 million. As Morgan Creek Digital’s managing partner Mark Yusko explained on the call, a $250 million equity offer would buy the investor syndicate 51% ownership, which would reduce the existing equity holders to 49% ownership. This is significant because last fall BlockFi was reportedly raising funds at a $5 billion valuation. That means this equity deal would represent a 90% decrease in value. During the call, Yusko claimed that the $1 billion loan to 3AC was overcollateralized by 30 percent, meaning that 3AC had put forward roughly $1.33 billion in assets. Later, Morgan Creek co-founder Anthony Pompliano claimed that two-thirds of that was bitcoin, which was immediately seized and liquidated and the remaining third were shares of GBTC. That would be worth roughly $430 million. According to the call, BlockFi was able to easily liquidate its position in Bitcoin but ran into problems with the GBTC because the discount had reached lows last week of nearly 34%. As BlockFi attempted to liquidate its GBTC position, Pompliano explained, the price went down. (The Block)
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