Accelerate the GFC | Financial Times

We have seen a multi-billion dollar default, a sharp market sell-off, missed margin calls and unresolved liquidity issues in the crypto markets.

At this rate, we should see mergers soon.

Lest we forget, the 2008/09 financial crisis led to a wave of consolidation in the US banking industry. While crypto lenders are not in a similarly central place in the global economy, that largely just means that their matchmaking is conducted informally by influential players, not central bankers or the U.S. Treasury.

Crypto lending and trading platform BlockFi may have just taken a step towards a merger. Than thatNew York PostAs reported last week, the crypto market's disarray sent BlockFi scrambling for an equity infusion - and it reportedly struggled to raise cash even at a deep discount.

So BlockFi has been pushed into a less friendly corner of the capital markets that opens up to institutions when the goal is survival and not a trip to the moon: loans. BlockFi has borrowed $250 million in a revolving credit facility from FTX, a competitor run by noted effective altruist and easy-going tech exec stereotype Sam Bankman-Fried.

Today @BlockFi signed a term sheet with @FTX_Official to secure a $250 million revolving credit facility, providing us with access to capital that further strengthens our balance sheet and platform strength.

– Zac Prince (@BlockFiZac) June 21, 2022

The interest rate and terms were not disclosed in the press release. BlockFi’s Prince talks about “future collaboration and innovation between BlockFi and FTX” and assures customers that the credit line will have no claim on customer funds. (We would hope this was a given, because this seems like an attempt at building trust, but in crypto it's never entirely clear.) Bankman-Fried focuses on BlockFi's "strong focus on prudent risk management" and unspecified future partnerships.

But we've seen this movie before. How directly the two compete is debatable, but both offer trading, wallets and lending for individual crypto traders and broader services for institutions.

The talk of partnership and collaboration can only be a sign that this credit line is set up to eventually become a controlling interest.