Shalini Nagarajan

Core Scientific was lent millions by top traditional finance institutions, a move that helped the cryptocurrency miner thrive and build out its business.&nbsp;



BlackRock and Apollo Global Management are among a group of creditors that lent the miner $500 million by purchasing its convertible notes, a <a href="https://cases.stretto.com/public/X217/12024/PLEADINGS/1202401182380000000128.pdf" target="_blank" rel="noreferrer noopener">court filing</a> published Jan. 18 showed. <a href="https://www.bnnbloomberg.ca/blackrock-apollo-among-creditors-lending-500-million-to-core-scientific-1.1874321" target="_blank" rel="noreferrer noopener">Bloomberg</a> first reported the news on Tuesday.



The miner managed to raise capital as BlackRock snapped up $38 million of convertible notes via subsidiary-managed accounts in August 2021, the report said. Apollo acquired $33.6 million between April and August that year.



They also contributed $17 million and $6.1 million respectively towards debtor-in-possession financing (DIP) last year, which would allow Core Scientific to continue running during bankruptcy.&nbsp;



The creditors, referred to in the court filing as an ad hoc group of DIP financing lending, also included Gullane Capital, multi-strategy investment firm Ibex Investors and ICG Advisors.



“The members of the Ad Hoc Group are either the beneficial holders of, or the investment advisors or managers to, funds and/or accounts that hold disclosable economic interests in relation to [Core Scientific],” the filing reads.



Other members holding Core Scientific notes are MassMutual, Corbin Capital Partners, Jordan Park Group, Kensico Capital Management, Marsico, Sabby Volatility Warrant Master Fund and Toroso Investments.&nbsp;



The largest creditor was Ibex, which lent Core $97.9 million in April 2021 and another $10.1 million towards the DIP loan.



Core Scientific <a href="https://blockworks.co/news/bitcoin-miner-core-scientific-to-file-bankruptcy-stock-tanks-30">filed for bankruptcy</a> last month after the company warned its cash resources would be exhausted by the end of 2022. Crypto miners struggled last year amid rising energy prices and broader macro trends affecting cryptoasset prices.



Earlier this month, the miner decided to <a href="https://blockworks.co/news/core-scientific-to-switch-off-celsius-miners-freeing-space-for-other-clients">free up hosting space</a> by letting go of bankrupt crypto lender Celsius as a client.



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Apollo Global Management

Top TradFi Institutions Lent Millions to Crypto Miner Core Scientific

Michael Bodley

In Sam Bankman-Fried’s latest Hail Mary to salvage his cryptocurrency exchange, FTX, the under-fire former billionaire turned to private equity powerhouse Apollo Global, according to three sources familiar with the matter.



There are no indications the attempted rescue finance package moved forward.



Sources said any one investor going it alone, irrespective of dry powder on hand, would represent outsized risk. 



Any potential deal for any large institutional player would almost certainly make a push for FTX.US, the exchange’s US arm that has historically been profitable and on a solid growth trajectory. Rival Binance, FTX’s original suitor, suddenly pulled the plug on its own deal to acquire FTX outright. 



A spokesperson for Apollo declined to comment, as did a spokesperson for FTX. Sources were granted anonymity to discuss sensitive business dealings.&nbsp;



That acquisition, which had been pending due diligence and finalizing terms, fell apart as US regulatory scrutiny mounted. Binance CEO Changpeng “CZ” Zhao balked at the prospect of purchasing the flailing, liquidity-starved FTX without the inclusion of its <a href="https://cms.blockworks.co/news/1-binance-ftx-deal-is-off-unless-ftx-us-is-part-of-the-package-source/" target="_blank" rel="noreferrer noopener">US-based counterpart</a>, sources said.



<h3 class="wp-block-heading">FTX bailout options</h3>



Bankman-Fried’s attempts to salvage that rescue package so far appear to have been largely unsuccessful as deep-pocketed asset managers weigh the likelihood of a regulatory crackdown and continue to parse the collapse of the exchange’s native token, FTT.



The cost of the rescue would be hefty, with two sources pegging the figure between $5 and $10 billion. <a href="https://www.reuters.com/technology/exclusive-bankman-fried-seeks-94-bln-package-ftx-rescue-sources-2022-11-10/" target="_blank" rel="noreferrer noopener">Reuters reported</a> an FTX push is in the works to somehow rustle up $9.4 billion, including funding from Dan Loeb’s Third Point and Justin Sun.



Blue-chip investment banks have also fielded incoming calls from FTX and intermediaries working on the exchange’s behalf, all three sources said. But that, so far, appears to be a non-starter.&nbsp;



“I feel like it would be a big [private equity] shop],” one source said. “I don’t think the banks would ever stick their neck out there for something like this.”



But <a href="https://cms.blockworks.co/news/did-cz-really-have-any-intention-of-buying-ftx/">what </a><a href="https://cms.blockworks.co/news/did-cz-really-have-any-intention-of-buying-ftx/" target="_blank" rel="noreferrer noopener">w</a><a href="https://cms.blockworks.co/news/did-cz-really-have-any-intention-of-buying-ftx/">ould</a> any backers be acquiring, anyway? FTX’s tech stack and personnel, potentially —&nbsp;but there would be questions over the value of its assets and customer base, both of which have been plummeting by the hour ever since the Binance deal was taken off the table.&nbsp;



Even for $1, the price CZ offered to purchase the entire operation, the assorted headaches of debt and regulatory issues might be too high a burden to bear.&nbsp;



“Doesn’t make sense to buy a flaming pile of trash,” a source said.







Updated, November 10 1:37pm ET: Clarified that there is no indication that Apollo has engaged in rescue financing or intends to do so.



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FTX Turns to Apollo in Latest Bailout Bid

Ben Strack

<div id="highlights-block_626ab28abe9d5" class="highlights">
 <ul>
 <li>Moy will be key in Apollo’s strategy to invest in innovative digital asset companies and founders</li>
 <li>The executive recently helped JPMorgan become the first bank to launch a virtual lounge in the metaverse</li>
 </ul>
 
</div>



Former JPMorgan Managing Director Christine Moy is set to join Apollo Global Management to lead its digital asset strategy as the firm created the role to delve deeper into the segment.



Founded in 1990, Apollo is an alternative asset management business with roughly $500 billion in assets under management as of Dec. 31, 2021. Moy is slated to start at the company in mid-May.



“Christine will lead digital asset strategy across the firm, exploring more ways to apply blockchain technologies to our business,” an Apollo spokesperson told Blockworks. “She’ll also play a key role in our strategy to invest in the most innovative digital asset companies and founders, with a specific focus on those transforming the financial services sector, where Apollo can serve as a validator and enabler of new technologies.”



The hire marks a continuation of the firm’s efforts to fund companies, protocols and other projects in the segment.



Apollo, for example, <a href="https://www.globenewswire.com/en/news-release/2021/07/14/2262721/0/en/Apollo-and-Figure-to-Collaborate-on-Blockchain-Enabled-Initiatives.html" target="_blank" rel="noreferrer noopener">agreed to collaborate</a> with fintech company <a href="https://www.figure.com" target="_blank" rel="noreferrer noopener">Figure</a> on a series of blockchain-enabled initiatives last year and invested in the company’s $200 million Series D funding round.&nbsp;



Moy will take on the new role after spending 18 years at JPMorgan. She most recently oversaw the company’s blockchain, crypto and metaverse strategy, which included leading initiatives in digital assets, tokenized payments, internet-of-things, digital identity, digital collectibles and virtual worlds, according to her LinkedIn profile.&nbsp;



She also led blockchain network <a href="https://www.jpmorgan.com/onyx/liink" target="_blank" rel="noreferrer noopener">Liink</a>, a data marketplace that enables cross-border payments for financial institutions and corporates.



At JPMorgan, Moy led the <a href="https://cms.blockworks.co/jpmorgan-enters-the-metaverse-with-virtual-decentraland-lounge/" target="_blank" rel="noreferrer noopener">launch of a virtual lounge</a> in blockchain-based world Decentraland in February, becoming the first bank to do so. The “Onyx lounge” was unveiled along with a <a href="https://www.jpmorgan.com/content/dam/jpm/treasury-services/documents/opportunities-in-the-metaverse.pdf" target="_blank" rel="noreferrer noopener">report</a> from the bank outlining metaverse-related growth opportunities for businesses and causes for its “explosive interest.”



The bank noted in the report at the time that the metaverse will likely infiltrate every sector in some way in the coming years and estimated the market opportunity to be more than $1 trillion in yearly revenues.&nbsp;



Though JPMorgan Chase CEO Jamie Dimon has criticized crypto in recent years — calling bitcoin “worthless” — he recognized the potential of blockchain technology in a <a href="https://reports.jpmorganchase.com/investor-relations/2021/ar-ceo-letters.htm" target="_blank" rel="noreferrer noopener">recent shareholder letter</a>. Dimon noted the bank’s use of Liink to enable banks to share complex information, as well as its use of a blockchain to move tokenized US dollar deposits with <a href="https://www.jpmorgan.com/solutions/cib/news/digital-coin-payments" target="_blank" rel="noreferrer noopener">JPM Coin</a>.&nbsp;



“Decentralized finance and blockchain are real, new technologies that can be deployed in both public and private fashion, permissioned or not,” he wrote. “We believe there are many uses where a blockchain can replace or improve contracts, data ownership and other enhancements; for some purposes, however, it is currently too expensive or too slow to be deployed.&#8221;



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