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    British Army's Twitter and YouTube accounts hacked to promote cryptocurrency scams

    A hacker, or hackers, took over the Twitter and YouTube accounts of the British Army on Sunday.
    The army’s Twitter profile was altered to show images of fake NFTs and promote crypto giveaway schemes.
    Its YouTube account, meanwhile, aired livestreams with clips of Elon Musk and directed users to crypto scam websites.

    A screenshot of the British Army’s Twitter profile when it was hacked, via Wayback Machine. Its profile and banner pictures were changed to resemble a nonfungible token collection called “The Possessed.”

    A hacker compromised the social media accounts of the British Army to push people toward cryptocurrency scams.
    The army’s Twitter and YouTube profiles were taken over by the hacker, or hackers — the identity of whom is not yet known — on Sunday. The Twitter account’s name was changed to “pssssd,” and its profile and banner pictures were changed to resemble a nonfungible token collection called “The Possessed.”

    The Possessed’s official Twitter account warned users of a “new verified SCAM account” impersonating the collection of NFTs — tokens representing ownership of pieces of online content.
    Earlier Sunday, the account was renamed “Bapesclan” — the name of another NFT collection — while its banner image was changed to a cartoon ape with clown makeup on. The hacker also began retweeting posts promoting NFT giveaway schemes.
    Bapesclan didn’t immediately respond to a CNBC direct message on Twitter.
    The name of the U.K. military’s YouTube account, meanwhile, was changed to “Ark Invest,” the investment firm of Tesla and bitcoin bull Cathie Wood.
    The hacker deleted all the account’s videos and replaced with them with livestreams of old clips taken from a conversation with Elon Musk and Twitter co-founder Jack Dorsey on bitcoin that was hosted by Ark in July 2021. Text was added to the livestreams directing users to crypto scam websites.

    Both accounts have since been returned to their rightful owner.
    “The breach of the Army’s Twitter and YouTube accounts that occurred earlier today has been resolved and an investigation is underway,” Britain’s Ministry of Defense tweeted Monday.
    “The Army takes information security extremely seriously and until their investigation is complete it would be inappropriate to comment further.”
    A Twitter spokesperson confirmed the British Army’s account “was compromised and has since been locked and secured.”
    “The account holders have now regained access and the account is back up and running,” the spokesperson told CNBC via email.

    A YouTube representative was not immediately available for comment when reached by CNBC.
    Tobias Ellwood, a British Conservative lawmaker who chairs the defense committee in Parliament, said the breach “looks serious.”
    “I hope the results of the investigation and actions taken will be shared appropriately.”
    It’s not the first time a high-profile social media account has been exploited by hackers to promote crypto scams. In 2020, the Twitter accounts of Musk, President Joe Biden and numerous others were taken over to swindle their followers of bitcoin.
    — CNBC’s Lora Kolodny contributed to this report

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    Here are the China trends investors bet money on during a sluggish few months

    Manufacturing companies in China snagged the most investment deals in the first half of the year among 37 sectors tracked by business database Qimingpian.
    During that time, roughly a quarter of early-stage to pre-IPO manufacturing deals were related to semiconductors, preliminary data showed.
    The interest in the industry came despite an overall drop in deals in China.

    A factory in Suqian, Jiangsu province, China, on May 9, 2022.
    Future Publishing | Future Publishing | Getty Images

    BEIJING — By the numbers, manufacturing companies in China snagged the most investment deals in the first half of the year among 37 sectors tracked by business database Qimingpian.
    In fact, the number of early-stage to pre-IPO deals in manufacturing rose by about 70% year-on-year despite Covid controls and a plunge in Chinese stocks during the last six months.

    About 300, or roughly a quarter of those deals, were related to semiconductors, preliminary data showed. Several of the investors listed were government-related funds.
    Data on early-stage investments aren’t always complete due to the private nature of the deals. But available figures can reflect trends in China.
    Investor interest in chip companies comes as Beijing has cracked down on consumer-focused internet companies, while promoting the development of tech such as integrated circuit design tools and equipment for producing semiconductors.
    Manufacturing accounted for about 21% of investment deals in the first half of the year, according to Qimingpian. The second-most popular industry was business services, followed by health and medicine.

    Electric car and transportation-related start-ups ranked first by capital raised, at 193 billion yuan ($28.82 billion), based on available data. Monetary amounts were not disclosed for many deals.

    “In the last 12 months I think that there’s been a lot of hot capital chasing after a few deals that are in sectors that the government is promoting heavily,” said Gobi Partners managing partner Chibo Tang, without naming specific industries. He said the trend has resulted in dramatic increases in valuation, while fundamentals haven’t changed much.
    A two-month lockdown in Shanghai and Covid-related restrictions hit business sentiment and prevented people from traveling to discuss and close deals.
    In the first half of the year, the overall number of investment deals in China dropped by 29% from the same period a year ago, and declined by 25% from the second half of last year, according to CNBC calculations of Qimingpian data.
    “Given the market downturn in the recent months, there is a lot more capital on the sidelines,” Gobi Partners’ Tang said Monday on CNBC’s “Squawk Box Asia.”
    His firm expects more early-stage investment opportunities will arise in the next 12 months, as valuations drop. Tang noted how many start-ups that raised capital 18 months ago had growth forecasts that now are being reset lower.
    “Founders are having a more difficult time raising money,” he said, “so the conversations we are having with them is how they should conserve capital, how they should extend their runway.”

    Read more about China from CNBC Pro

    Over the last 12 months, Beijing’s crackdown on tech and education companies following Didi’s IPO in New York has paused the ability of investment funds to cash out easily on their bets via an initial public offering.
    While the future of Chinese stock listings in the U.S. remains in limbo, many start-ups have opted for a market closer to home.
    But as of June 14, more than 920 companies were still in line to go public in mainland China and Hong Kong, according to an EY report. That was little changed from March.
    “Pipelines remain strong partly due to backlog from some delayed IPOs since Q1,” EY said in the report.
    Sentiment in mainland markets picked up as Covid controls eased in the last few weeks. Despite year-to-date declines of more than 6%, the Shanghai composite surged by nearly 6.7% in June for its best month since July 2020.

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    As interest rates climb and the economy cools, can companies pay their debts?

    Welcome to the American corporate-debt market of 2022. Often the only risky bonds that are being issued are the legacy debts of a now ancient-seeming time—when interest rates were low and a recession was unthinkable. Elsewhere, the high-yield market has almost ground to a halt. A paltry $83bn of risky debt has been issued so far in 2022, 75% less than in the same period last year. A sharp rise in interest rates in the first half of this year has cooled credit markets, wrong-footed investors and complicated bankers’ lives. In January Bank of America, Credit Suisse, Goldman Sachs and a handful of other banks agreed to finance a $15bn deal for two private-equity firms to buy Citrix, a software company. They promised to issue the riskiest $4bn of that debt at a maximum interest rate of 9%. At the time, the average yield on bonds with a credit rating of ccc, a speculative grade, was around 8%. The Citrix deal is expected to close some time in July. If bankers cannot sell the debt below the interest-rate cap they will be on the hook for the difference. But the yield on ccc-rated bonds has soared above 14%, making it difficult for the banks to sell the debt to investors below the cap. “If the market is anything like it is today, those banks are going to lose hundreds of millions—and potentially a billion—dollars on this deal alone,” says Roberta Goss of Pretium, a debt-investment manager. The stakes in aggregate are far higher. A steady decline in interest rates over the past 30 years encouraged companies to borrow record amounts. Now the cost of servicing and refinancing that debt mountain is climbing, profits are being dented by rising costs and inventories are piling up at some firms as demand slows. Does a corporate-debt meltdown loom?America’s last big debt crisis, in 2007-09, was in housing. The stock of household debt relative to gdp had climbed sharply as lenders had aggressively issued mortgages and property prices had soared. When interest rates rose, borrowers began to default. Some 3m households were eventually foreclosed on in 2008. This time it seems far less likely that households will be the borrowers struggling. Lending standards have been tightened and debt levels have fallen. Household debt to gdp peaked at 99% in 2008 but has since tumbled to just 75%. By contrast, corporate debt as a share of gdp, at around 80%, has been at or near record highs during the past two years (see chart). To understand where problems might arise, it is important to look across the many funding options available to firms and their owners. American companies owe around $12.5trn. Some $6.7trn of that is in bonds, mostly issued by large or mid-size public companies. An additional $1.3trn is loans from banks, and another $1.1trn is mortgage debt. The rest—over $3trn—is financing from non-banks, comprising mostly of either private credit, typically loans made for private-equity buy-outs, or “syndicated” loans, which originate in banks but are split into pieces and sold to investors, or sometimes bundled into other debt securities. The bond market, as the biggest source of debt, might seem like the natural place to go looking for trouble. But firms that issued bonds are “relative winners” of the rise in interest rates, says Eric Beinstein of JPMorgan Chase, because most bonds pay fixed coupons. Of the $5trn-worth of corporate bonds issued since the start of 2020 some 87% pay fixed coupons. And those coupon rates are at all-time lows. The average coupon on an investment-grade bond is just 3.6%—half the rate in the early 2000s and still below the level in 2019. That will insulate borrowers as rates rise. These fixed-rate bonds are not due to mature soon, either. The riskier high-yield end of the bond market—the roughly $1.5trn owed by sub-investment-grade issuers, which tend to be smaller or heavily indebted companies—saw a wave of refinancing in 2020 and 2021. The result is that only a tiny $73bn-worth of high-yield bonds are due to mature in 2022 and 2023. The peak of risky-bond maturation will not come until 2029.The impact of rising rates is likely to be much greater in the syndicated-loan and private-debt markets, which typically issue floating-rate debt (although some of that rate risk may have been hedged). They have also seen explosive growth. Between 2015 and 2021 the value of outstanding high-yield bonds grew a little, from around $1.3trn to $1.5trn. By contrast, syndicated loans grew from $900bn in 2015 to $1.4trn over the same period. Private credit was the runt in 2015, with just $500bn in assets under management. Now, with $1.1trn in assets, it rivals its other risky debt peers.John Kline of New Mountain, a private-credit firm, argues that the growing market share of private credit is a reflection of the fact that it offers issuers price certainty and is “much easier to deal with” than slicing up a bank loan through a syndication process, or issuing a bond. He points out that the barbarian days of private-equity shops leveraging firms with 85% debt to total value are long gone. The average debt-to-value ratio for private-equity deals last year was closer to 50%.Still, that ratio is less reassuring once you consider how far private-equity valuations might have fallen this year (the formal figures are revised infrequently, unlike public-market valuations). And with great growth seems to have come fresh risk. Compared with the profits of the firms they acquired, debt levels look much higher: equal to an average of six times gross operating profit, a little higher than the record set in 2019 or in any of the past 20 years. “Whenever a market grows quickly, there can be a sort of reckoning if the environment changes,” says Mr Beinstein. The challenge, he says, is getting hold of any details or data on private deals. In the bright lights of public markets it is easy enough to find evidence suggesting that companies are not facing an imminent crisis. The problem is that a chunk of the debt lurks in the shadows. ■ More

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    FTX signs a deal giving it the option to buy crypto lender BlockFi

    FTX signed a deal with BlockFi that gives it the option to buy the lender at a maximum price of $240 million. The company did not provide a minimum price.
    FTX also upped its prior loan of $250 million to $400 million.
    It comes as one of BlockFi’s counterparties, hedge fund Three Arrows Capital falls into liquidation and crypto’s bear market causes more casualties.

    Sam Bankman-Fried, CEO of cryptocurrency exchange FTX, at the Bitcoin 2021 conference in Miami, Florida, on June 5, 2021.
    Eva Marie Uzcategui | Bloomberg | Getty Images

    FTX has signed a deal giving it the option to buy crypto lending company BlockFi.
    The agreement gives FTX the ability to buy BlockFi at a maximum price of $240 million, the company announced Friday. The deal price is based on certain performance targets. The company it did not give a minimum deal price.

    CNBC reported Thursday that a term sheet would be signed by the end of this week, with a source saying it could be as low as $25 million. Even at the high end of FTX’s deal price, it marks a significant decrease in the value of BlockFi. The Jersey City, New Jersey-based company was last worth $4.8 billion, according to PitchBook. 
    The term sheet also pads BlockFi’s balance sheet with a larger loan.
    FTX increased a previous $250 million revolving credit facility to a total $400 million. BlockFi executives said the company had not drawn on this credit facility to date, and has “continued to operate all our products and services normally.”
    FTX CEO Sam Bankman-Fried has been seen as a lender of last resort in the space. In addition to BlockFi, Bankman-Fried’s company Alameda Research provided a $500 million loan to Voyager.
    As to why BlockFi agreed to move forward with the deal, the company pointed to crypto market volatility and the failure of hedge fund Three Arrows Capital. It also pointed to embattled crypto company Celsius, which froze customer deposits two weeks ago citing “extreme market conditions.” BlockFi said it had seen an uptick in client withdrawals that week, despite having no exposure to Celsius.

    BlockFi said it has suffered $80 million in losses “which is a small fraction of losses publicly reported by other lenders.” Its losses with the hedge fund will be part of Three Arrows’ ongoing bankruptcy case, the company said.
    “Outside of this transaction, we realize that there is a lot of fear, uncertainty, and doubt in the crypto markets,” BlockFi CEO Zac Prince said. “From our vantage point, we continue to see a healthy ecosystem on the rise.”
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    The S&P 500 just had its worst first half in more than 50 years, which 'stressed' this classic investment strategy

    The S&P 500 Index of stocks had its worst first half since 1970, losing almost 21% in the first six months of the year.
    Meanwhile, the Bloomberg U.S. Aggregate bond index is down more than 10%, a rare dynamic given bonds’ typical role as a portfolio ballast when stocks plunge.
    Investors may be rethinking their 60/40 asset allocation strategy. It remains sound but may need a slight adjustment, financial advisors said.

    Stock trader on the floor of the New York Stock Exchange.
    Spencer Platt | Getty Images News | Getty Images

    The S&P 500 Index, a barometer of U.S. stocks, just had its worst first half of the year going back over 50 years.
    The index fell 20.6% in the past six months, from its high-water mark in early January — the steepest plunge of its kind dating to 1970, as investors worried about decades-high inflation.

    Meanwhile, bonds have suffered, too. The Bloomberg U.S. Aggregate bond index is down more than 10% year to date.
    The dynamic may have investors re-thinking their asset allocation strategy.
    More from Personal Finance:IRA rollovers often come with higher investment feesStudents are taking on ‘unsustainable debt’ for collegeJust 1% of people got a perfect score on this Social Security quiz
    While the 60/40 portfolio — a classic asset allocation strategy — may be under fire, financial advisors and experts don’t think investors should sound the death knell for it. But it does likely need tweaking.
    “It’s stressed, but it’s not dead,” said Allan Roth, a Colorado Springs, Colorado-based certified financial planner and founder of Wealth Logic .

    How a 60/40 portfolio strategy works

    The strategy allocates 60% to stocks and 40% to bonds — a traditional portfolio that carries a moderate level of risk.
    More generally, “60/40” is a shorthand for the broader theme of investment diversification. The thinking is: When stocks (the growth engine of a portfolio) do poorly, bonds serve as a ballast since they often don’t move in tandem.
    The classic 60/40 mix encompasses U.S. stocks and investment-grade bonds (like U.S. Treasury bonds and high-quality corporate debt), said Amy Arnott, a portfolio strategist for Morningstar.

    Market conditions have stressed the 60/40 mix

    Until recently, the combination was tough to beat. Investors with a basic 60/40 mix got higher returns over every trailing three-year period from mid-2009 to December 2021, relative to those with more complex strategies, according to a recent analysis by Arnott.
    Low interest rates and below-average inflation buoyed stocks and bonds. But market conditions have fundamentally changed: Interest rates are rising and inflation is at a 40-year high.

    U.S. stocks have responded by plunging into a bear market, while bonds have also sunk to a degree unseen in many years.
    As a result, the average 60/40 portfolio is struggling: It was down 16.9% this year through June 30, according to Arnott.
    If it holds, that performance would rank only behind two Depression-era downturns, in 1931 and 1937, that saw losses topping 20%, according to an analysis of historical annual 60/40 returns by Ben Carlson, the director of institutional asset management at New York-based Ritholtz Wealth Management.

    ‘There’s still no better alternative’

    Of course, the year isn’t over yet; and it’s impossible to predict if (and how) things will get better or worse from here.
    And the list of other good options is slim, at a time when most asset classes are getting hammered, according to financial advisors.

    If you’re in cash right now, you’re losing 8.5% a year.

    Jeffrey Levine
    chief planning officer at Buckingham Wealth Partners

    “Fine, so you think the 60/40 portfolio is dead,” said Jeffrey Levine, a CFP and chief planning officer at Buckingham Wealth Partners. “If you’re a long-term investor, what else are you going to do with your money?
    “If you’re in cash right now, you’re losing 8.5% a year,” he added.
    “There’s still no better alternative,” said Levine, who’s based in St. Louis. “When you’re faced with a list of inconvenient options, you choose the least inconvenient ones.”

    Investors may need to recalibrate their approach

    While the 60/40 portfolio may not be obsolete, investors may need to recalibrate their approach, according to experts.
    “It’s not just the 60/40, but what’s in the 60/40” that’s also important, Levine said.
    But first, investors ought to revisit their overall asset allocation. Maybe 60/40 — a middle-of-the-road, not overly conservative or aggressive strategy — isn’t right for you.
    Determining the right one depends on many factors that toggle between the emotional and the mathematical, such as your financial goals, when you plan to retire, life expectancy, your comfort with volatility, how much you aim to spend in retirement and your willingness to pull back on that spending when the market goes haywire, Levine said.

    While bonds have moved in a similar fashion to stocks this year, it would be unwise for investors to ditch them, said Arnott at Morningstar. Bonds “still have some significant benefits for risk reduction,” she said.
    The correlation of bonds to stocks increased to about 0.6% in the past year — which is still relatively low compared with other equity asset classes, Arnott said. (A correlation of 1 means the assets track each other, while zero connotes no relationship and a negative correlation means they move opposite each other.)
    Their average correlation had been largely negative dating back to 2000, according to Vanguard research.
    “It’s likely to work in the long-term,” Roth said of the diversification benefits of bonds. “High-quality bonds are a lot less volatile than stocks.”

    Diversification ‘is like an insurance policy’

    The current market has also demonstrated the value of broader investment diversification within the stock-bond mix, said Arnott.
    For example, adding diversification within stock and bond categories on a 60/40 strategy yielded an overall loss of about 13.9% this year through June 30, an improvement on the 16.9% loss from the classic version incorporating U.S. stocks and investment-grade bonds, according to Arnott.
    (Arnott’s more diversified test portfolio allocated 20% each to large-cap U.S. stocks and investment-grade bonds; 10% each to developed-market and emerging-market stocks, global bonds and high-yield bonds; and 5% each to small-cap stocks, commodities, gold, and real-estate investment trusts.)
    “We haven’t seen those [diversification] benefits for years,” she said. Diversification “is like an insurance policy, in the sense that it has a cost and may not always pay off.
    “But when it does, you’re probably glad you had it, Arnott added.

    Investors looking for a hands-off approach can use a target-date fund, Arnott said. Money managers maintain diversified portfolios that automatically rebalance and toggle down risk over time. Investors should hold these in tax-advantaged retirement accounts instead of taxable brokerage accounts, Arnott said.
    A balanced fund would also work well but asset allocations remain static over time.
    Do-it-yourselfers should make sure they have geographic diversification in stocks (beyond the U.S.), according to financial advisors. They may also wish to tilt toward “value” over “growth” stocks, since company fundamentals are important during challenging cycles.
    Relative to bonds, investors should consider short- and intermediate-term bonds over longer-dated ones to reduce risk associated with rising interest rates. They should likely avoid so-called “junk” bonds, which tend to behave more like stocks, Roth said. I bonds offer a safe hedge against inflation, though investors can generally only buy up to $10,000 a year. Treasury inflation-protected securities also offer an inflation hedge.

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    Stocks making the biggest moves premarket: Kohl's, Micron, Apple and more

    Check out the companies making headlines before the bell:
    Kohl’s (KSS) – Kohl’s tumbled 17.9% in premarket trading after the retailer confirmed an earlier CNBC report that it ended talks to be bought by Vitamin Shoppe parent Franchise Group (FRG). Kohl’s said the deteriorating retail and financial environment presented significant obstacles to concluding a deal. It also cut its current-quarter outlook amid more cautious consumer spending.

    Micron Technology (MU) – Micron slid 4.6% in the premarket despite reporting a better-than-expected quarterly profit. The chip maker’s shares came under pressure due to a lower-than-expected sales outlook, stemming from weakening overall demand.
    Apple (AAPL) – J.P. Morgan Securities analyst Samik Chatterjee reiterated an “overweight” rating on Apple, saying he is not as worried about Apple’s prospects as others. The firm has a December price target of $200 per share, $46 higher than its Thursday close.
    China-based electric vehicle makers – Li Auto (LI) delivered 13,024 vehicles in June, a 69% year-over-year increase for the China-based electric vehicle maker. Rival Xpeng (XPEV) delivered 15,295 vehicles in June, a 133% jump from a year earlier. Nio (NIO) delivered 12,961 vehicles in June, up 60% from a year ago. Li Auto added 1.7% in premarket action, Xpeng rose 2.1%, and Nio gained 1.8%.
    Meta Platforms (META) – The Facebook parent is slashing hiring plans and bracing for an economic downturn. In an employee question-and-answer session heard by Reuters, CEO Mark Zuckerberg said it might be “one of the worst downturns we’ve seen in recent history”.
    Caesars Entertainment (CZR), MGM Resorts (MGM) – The resort operators reached tentative contract agreements with Atlantic City casino workers, avoiding what might have been a costly strike during the busy July 4th holiday weekend.

    FedEx (FDX) – FedEx lost 2.1% in the premarket after Berenberg downgraded the stock to “hold” from “buy”, pointing to near-term earnings risks which could halt a recent rally in the stock.
    Coupang (CPNG) – The South Korean e-commerce company saw its stock rise 1.7% in the premarket after Credit Suisse upgraded it to “outperform” from “neutral”. The firm feels Coupang’s bottom-line turnaround prospects are underappreciated by investors.

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    FTX closes in on a deal to buy embattled crypto lender BlockFi for $25 million in a fire sale, source says

    Watch Daily: Monday – Friday, 3 PM ET

    Crypto exchange FTX is close to finalizing a term sheet to buy BlockFi and a deal is expected to be signed by the end of this week, three sources familiar with the situation told CNBC. 
    It comes after FTX provided a $250 million emergency line of credit to BlockFi.
    The price tag is well below BlockFi’s last valuation, leaving equity investors in BlockFi “wiped out” and writing off the value of their losses.

    FTX is swooping in to buy crypto lender BlockFi for pennies on the dollar, sources told CNBC.
    The term sheet is almost over the finish line and expected to be signed by the end of the week, according to three sources, who asked not to be named because the deal discussions were confidential. FTX is expected to pay roughly $25 million, one source said, 99% below BlockFi’s last private valuation. Another person with direct knowledge of the deal pegged the price closer to $50 million. Jersey City, New Jersey-based BlockFi was last valued at $4.8 billion, according to PitchBook. 

    The price tag could shift between now and Friday, the source said. An acquisition could also take multiple months to close. The person added that the deal could end up being options to acquire BlockFi at a later date, pending regulatory approval.
    Friday also marks the end of the quarter, which one source said was a catalyst for getting a deal signed. The Wall Street Journal first reported that FTX was seeking an equity stake in the company, while The Block reported this week that an outright deal was in the works. 
    An FTX spokesperson said the company “would not be commenting on the matter.” A BlockFi spokesperson said the company “does not comment on market rumors.” BlockFi CEO Zac Prince pushed back on the $25 million figure in a tweet calling the figure “market rumors.”
    The fire sale comes a week after FTX provided a $250 million emergency line of credit to BlockFi. FTX CEO Sam Bankman-Fried said at the time that the financing would help BlockFi “navigate the market from a position of strength.” 
    It’s the latest fallout for crypto lending companies amid plunging crypto asset prices. Funds have struggled with liquidity issues as counterparties fail to meet margin calls. Celsius and CoinFlex paused customer withdrawals citing “extreme market conditions.” Major cryptocurrency hedge fund Three Arrows Capital has fallen into liquidation, CNBC reported earlier, marking one of the biggest casualties of crypto’s bear market.

    Another source said equity investors in BlockFi are “wiped out” and are now writing off the value of their losses. The person said multiple offers were being considered, since there was no “shop clause” in the term sheet. 
    “There was more than one deal on the table,” a source told CNBC. 
    Billionaire Bankman-Fried has been seen as a lender of last resort in the space. In addition to BlockFi, Bankman-Fried’s company Alameda Research provided a $500 million loan to Voyager.
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