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BFD Expert Voices - Private Credit

BFD Expert Voices

Sam Bankman-Fried is helping to shore up the balance sheets of some of the biggest crypto firms in the world, providing financing to both BlockFi and to Voyager Digital.

Why it matters: By acting as a white knight, the FTX CEO is seeking to head off any further contagion that could collapse the broader crypto industry.

Details: On Friday, crypto brokerage Voyager Digital signed a non-binding term sheet with Alameda Research, the crypto firm that SBF owns. The deal was for two revolving lines of credit. 

Subsequently, BlockFi announced Tuesday morning that it signed a term sheet with FTX for a $250 million revolving line of credit. 

Context: The agreements come at a time when crypto lenders Celsius Network and Babel Finance have suspended customer withdrawals while trying to shore up liquidity.

Flashback: This isn't the first time Bankman-Fried's companies have provided financing to another member of the crypto ecosystem.

Last August, FTX loaned $120 million to Liquid Global after the Japanese crypto exchange lost $90 million in a hack.

FTX later acquired Liquid and all of its subsidiaries in a push to launch licensed operations in Japan.

What they're saying: In an interview with NPR over the weekend, Bankman-Fried said:

"I do feel like we have a responsibility to seriously consider stepping in, even if it is at a loss to ourselves, to stem contagion.

"Even if we weren't the ones who caused it, or weren't involved in it. I think that's what's healthy for the ecosystem, and I want to do what can help it grow and thrive."

1 big thing: SBF to the rescue

FTX CEO Sam Bankman-Fried. Photo: Sarah Silbiger/Bloomberg via Getty Images

Magic Eden, an NFT-marketplace company built on Solana, announced Tuesday that it had raised $130 million in Series B funding valuing it at $1.6 billion.

Electric Capital and Greylock Partners led the round.

Why it matters: Investors may be pulling back from the broader crypto and NFT market, but some startups are still able to raise like it's 2021.

Of note: Magic Eden is now a unicorn, having been around for just nine months.

Details: The recent market volatility gave even the venture capital industry a renewed interest in profitability, with Magic Eden appearing to fit that bill. The company is cash flow positive and profitable down to the "very last line," CEO Jack Lu says.

In May, Magic Eden posted its best month ever for transaction volume, with revenue of $7.5 million.

2. The BFD: A new NFT unicorn

Illustration of a unicorn statue on top of a stack of cash.  

Block's market value is dropping steadily, cut in half since April. A lot of fintechs are suffering the same. But what's unique about Block's rout is that it comes as it's not only being slammed by a market storm, but digesting the $27 billion purchase of Afterpay, Michael Flaherty writes. 

Why it matters: Integrating Afterpay and plugging the buy-now-pay-later into Block's system is critical to the success of both the deal and the combined company. (The value of the stock deal was $29 billion at announcement in August, and closed at a value of $27 billion early this year.) 

Of note: Block's (formerly Square) market value when it inked the Afterpay deal was around $120 billion. It's now just above $30 billion, or darn close to the value of the entire Afterpay purchase. 

Investors are keenly aware of that fact, and so, apparently, is activist hedge fund titan Dan Loeb. Research firm Gordon Haskett pointed out in a note that Loeb, in a tweet reply, made mention of that stark value drop by Block.

A person familiar with the matter pointed out that Block's ability to parse through Afterpay's loans and move from one balance sheet to another is a much more arduous process than anticipated. 

Rising interest rates are also playing a role in the indigestion, the person said. 

The bottom line: If Block isn't able to pull off this integration faster, and build its market value back up, it, too, may be the target of a well-capitalized suitor. At the very least, it may have to contend with the kind of activist investor ire that Third Point's Loeb is already hinting at.  

That said, an entity seeking to shake things up at Block needs to get past Jack Dorsey's majority ownership of the company. 

3. Reaffirming Block's market value

Photo illustration of Jack Dorsey holding a piggy bank.

Photo Illustration: Sarah Grillo/Axios. Photo of Block CEO Jack Dorsey: Burhaan Kinu/Hindustan Times via Getty Images

The crypto industry was built in part on swagger, enthusiasm and optimism. Now, with markets sliding and inflation plaguing the global economy, cryptocurrencies have been among the first assets sold.

Babel Finance announces steps to improve its liquidity (The Block)

The company says it reached preliminary agreements with major counterparties “on the repayment period of some debts.”

Solend tried to take over a ‘whale’ account to stop it from collapsing the system (CNBC)

The DeFi lender said a single whale had an “extremely large margin position,” putting the protocol and its users at risk. But Solend voters blocked the takeover.

The Singapore-based crypto exchanged laid off about 30% of its workforce amid the market tumult.

The Brazilian neobank plans to scoop up companies in its space as the market rebalancing lowers prices.

MoonPay launches NFT platform with Universal and Fox (CNBC)

The new platform enables large brands, agencies and enterprises to mint hundreds of millions of NFTs a day.

4. Credit score

Illustration of positive and negative trend lines coming out of center point.

• Astorg and Empiris approached financial publisher Euromoney Institutional (LSE: ERM) about a £1.6b buyout. http://axios.link/mgQ7

• Openly, a Boston-based homeowners insurance startup, raised $75m in Series C funding from Advance Venture Partners, Clocktower Ventures, Obvious Ventures, Gradient Ventures, PJC Ventures, Techstars and Mtech. www.openly.com

• Stashfin, a Singapore-based neobank focused on India and Southeast Asia, raised $70m in Series C funding. Uncorrelated Ventures, Abstract Ventures and Fasanara Capital invested. It also raised $200m in debt. http://axios.link/fMBj

• Wahed, a New York-headquartered Islamic fintech company, raised $50m in Series B funding led by Wa’ed Ventures, the venture capital arm at Saudi Aramco Entrepreneurship Center. http://axios.link/TdXH

• Huspy, a UAE-based mortgage and home-buying platform, raised $37m in Series A funding. Sequoia Capital India led and was joined by Founders Fund, Fifth Wall and Chimera Capital. http://axios.link/wKW0

• Fido, a Ghana-based credit startup, raised $30m in Series A funding. Fortissimo Capital led and was joined by Yard Ventures. http://axios.link/vFNS

• FinBox, an Indian credit and borrowing startup, raised $15m in Series A funding led by A91 Partners, with participation from Aditya Birla Ventures, Flipkart Ventures and Arali Ventures. http://axios.link/Amdc

• PayGlocal, a New Delhi-based cross-border payments startup, raised $12m in funding led by Tiger Global and Sequoia Capital India, with participation from BeeNext and angel investors. http://axios.link/LEKQ

• Nibble Health, a New York-based enterprise healthcare payments startup, raised $8.5m in seed funding co-led by Tiger Global and Wing VC. www.nibblehealth.com

• FTX US acquired Embed Financial Technologies, a provider of white label brokerage services and APIs. http://axios.link/S2PW

5. Deals of the day

• Santander UK appointed Santander Group's Elisabet Pinilla as its new CTO and Stephen White as its new COO. White will be joining Santander UK from Yorkshire Building Society. http://axios.link/cbhb

• Christie’s head of NFTs, Noah Davis, is joining Yuga Labs as brand leader for NFT collection CryptoPunks. http://axios.link/0XTG

• Joe Conyers III, head of the NFT platform at digital assets exchange Crypto.com, left the company last week amid the unit’s restructuring. http://axios.link/yt0B

• Digital SME banking startup Recognise Bank hired Deutsche Bank veteran Sahil Thapa as its new CTO. http://axios.link/9iKI

6. It's personnel

Welcome back, fintech friends. Happy Tuesday.

Situational awareness: It's an insane week for conferences. Ryan is at NFT.NYC and Lucinda will be at Collision after a single day at NFT.NYC. Come say hi. 👋

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June 21, 2022

1 big thing: SBF to the rescue