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SPIRIT Blockchain – Weekly Wrap-up 6/24/2022

Here’s what happened in blockchain and crypto this week.

The ramifications of the recent crypto selloff continue to be felt across the sector. Reports on potential contagion effects of the previous weeks’ developments came thick and fast this week. Market participants were particularly concerned about spillover risks from troubled crypto firms Celsius and Three Arrows Capital to other crypto lenders, and potentially the crypto sector as a whole. To prevent further loss of confidence, crypto exchange FTX stepped in this week by providing liquidity to embattled crypto firms BlockFi and Voyager Digital, essentially bailing them out. 
 
The large drawdown in cryptoasset prices continues to have ripple effects on the industry, particularly on some of the crypto lenders and brokerage firms. To prevent further contagion, FTX and Alameda Research founder Sam Bankman-Fried (SBF) decided to provide credit lines and financing to BlockFi and Voyager, respectively. SBF tweeted that “We take our duty seriously to protect the digital asset ecosystem and its customers”. 
 
BlockFi secured a $250 million credit facility from FTX in a reprieve for the US crypto lender. Prior to the deal with FTX, BlockFi had been struggling to close a new round of venture funding. According to The Block, the lender had to cut its valuation to win over investors. Today, the WSJ reports that FTX is also in talks to acquire a stake in BlockFi. Previously, the Financial Times reported that BlockFi was among the companies that had liquidated the collateral backing a loan from Three Arrows Capital (3AC). 
 
SBF’s quantitative research firm Alameda holds an ownership stake in Canadian crypto broker Voyager Digital. This week, Voyager also received a $500 million bailout from Alameda in the form of a $200 million credit line and a $300 million bitcoin revolving facility. On Wednesday, Voyager issued a statement saying that it may issue a notice of default to 3AC for failure to repay a loan consisting of 15,250 BTC and $350 million USDC. As a result, Voyager shares plunged up to 64% on Wednesday, ending the day more than 50% lower. The company also reduced its customers’ daily withdrawal limit to $10,000 from $25,000. 
 
Meanwhile, crypto lender Celsius which halted customer withdrawals last week canceled a planned “ask-me-anything” (AMA) session minutes before its scheduled time. It later published a note saying that it will “focus on navigating these unprecedented challenges”. 
 
 
Market Overview
 
The global cryptoasset market capitalization currently amounts to $989 billion –  up from $939 billion since Friday last week, with bitcoin accounting for 40.8%. Among the Top 30 cryptoassets by market cap, Polygon (MATIC) outperformed, gaining 53.6% over the week. During the same period, the price of bitcoin (BTC) increased by 3.7% to $21,158 while the price of ether (ETH) rose by 13.8% to $1,214. The total value locked (TVL) in DeFi sits at $76 billion – up from $74.5 billion last week – with Ethereum accounting for about 64% of TVL.

 

This Week’s Headlines

 

Notable Deals and Fundraising

  • NFT marketplace acquisitions: eBayacquires KnownOrigin, Uniswap Labsacquires Genie
  • Digital asset prime brokerage FalconX raises $150 million in a Series D at an $8 billion valuation
  • Solana NFT marketplace Magic Edenraises $130 million at a $1.6 billion valuation
  • Binance.US to raise another $50 million at a $4.5 billion valuation
  • Prime Trust raises $107 million in a Series B to add new crypto products
  • NFT lending platform Astaria raises $8 million in a seed round
  • FTX US acquires equities clearing startup Embed Financial
  • NFT gaming platform Cryptoys raises $26 million in a round led by a16z
  • Blockchain payments firm Roxe to list via $3.6 billion SPAC Deal

 

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Manuel Trojovsky, Advisor Investment & Research