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Zac Prince
Zac Prince on BlockFi, Bitcoin, and GalaxyOne
- BlockFi's collapse resulted from three sequential shocks: a $100 million regulatory fine in mid-2021 that depleted capital reserves; a 85% asset withdrawal following Celsius and Voyager bankruptcies in May 2022; and acquisition by FTX, which subsequently imploded while BlockFi remained operationally solvent. - FTX founder Sam Bankman-Fried and Alameda sent falsified balance sheets to lenders including BlockFi, with internal Slack messages showing SBF selecting the "biggest lie" among fabricated financial options. - The 2022–2023 "crypto war" damaged companies that never committed fraud (BlockFi, Silvergate, SVB) alongside fraudulent operators, making regulatory distinction difficult and causing collateral damage across the ecosystem. - Post-crisis lessons shifted Zac Prince's risk appetite dramatically: he now favors regulated crypto ETFs from BlackRock or Fidelity over direct crypto holdings and avoids yield-generation strategies that don't native produce returns. - Galaxy One bundles checking, brokerage, crypto, and premium yield products under one app, with crypto portfolio loans at sub-9% rates and 8% yield on cash backed by Galaxy's balance sheet guarantee. - The platform prioritizes long-term investing principles and full balance sheet management over high-leverage speculation, leveraging AI tools and agentic capabilities for automated financial tasks.
Zac Prince on BlockFi, Bitcoin, and GalaxyOne
- BlockFi collapsed due to three sequential shocks: a $100M regulatory fine in 2021, a 10-to-2 billion asset withdrawal when Celsius and Voyager failed in May 2022, and ultimately the FTX acquisition followed by FTX's November 2022 implosion. - Sam Bankman-Fried and Alameda sent falsified balance sheets to lenders including BlockFi, with Slack messages showing SBF selecting "the biggest lie" from multiple spreadsheet tabs Caroline created. - The regulatory environment from 2022–2023 (the "crypto war") successfully destabilized multiple crypto-focused financial institutions, including BlockFi, Celsius, Voyager, and Silvergate, alongside traditional bank collapses like SVB. - Zac Prince shifted his personal risk appetite and investment philosophy post-crisis, moving away from crypto yield generation toward traditional brokerage accounts, ETFs (BlackRock, Fidelity), and tax-efficient strategies. - Galaxy One combines banking, brokerage, crypto, and premium yield products under one app, avoiding speculation-focused features (prediction markets, extreme leverage) in favor of long-term wealth management principles. - AI agents and automation are being evaluated for financial workflows like wire transfers, bill payment, and portfolio management, with both native and third-party integration models under consideration.
#365: Zac Prince on Raising BlockFi's $50M Series C Financing
- BlockFi closed a $50 million Series C funding round led by Morgan Creek Digital (Pompliano's firm), with participation from Valar, Winklevoss Capital, Fidelity, two university endowments, SCB10X (Thailand's largest bank's venture arm), and NBA player Matthew Dellavedova. - BlockFi operates three core products: a cryptocurrency exchange for buying/selling Bitcoin and other assets; an interest-bearing account paying up to 8.6% APY on stablecoins and crypto; and collateralized loans against crypto holdings at conservative 50% loan-to-value ratios. - Revenue grew nearly 10x in seven months (from under $1M in December 2019 to ~$10M in July 2020), while assets under management increased from $200M to over $1.5B, all while maintaining a perfect lending performance record with zero defaults. - BlockFi is launching a Bitcoin rewards credit card (first cards to employees, investors, and influencers this year; broader rollout early 2021) and expanding internationally with teams in London and Singapore. - The company operates under an MSB (money services business) registration at federal level and is acquiring state-level money transmission licenses; all states can access lending and trading, but New York residents cannot earn interest on crypto holdings. - CEO Zach Prince emphasized the strategic importance of deposits and payments as a foundation for building a comprehensive financial services platform that can add credit products, cards, and other services over time, creating customer stickiness.
Zac Prince, Co-Founder & CEO of BlockFi: The Future of Crypto Lending
- BlockFi offers two main products: a lending service allowing users to borrow USD against crypto collateral at rates as low as 4.5% annually, and an interest account paying 6–8.6% annual returns depending on the asset deposited. - BlockFi has removed account minimums and withdrawal fees effective immediately, lowering barriers to entry for retail participants holding smaller amounts of Bitcoin or Ether. - The company uses Gemini as its custody partner, which holds assets in cold storage and carries insurance against hacks; BlockFi never holds private keys. - BlockFi finances primarily market-making and proprietary trading firms rather than crypto-native companies, reducing counterparty risk through over-collateralization and rigorous KYC/financial diligence. - Interest Payment Flex allows users to receive interest in any supported asset (Bitcoin, Ether, or GUSD) regardless of what they deposit, enabling tax and portfolio management strategies. - BlockFi has raised an $18.3 million Series A led by Velvet Ventures and backed by Galaxy Digital, Fidelity, Susquehanna, and Acuna Capital; the company plans to grow from 50 to 100–125 employees by end of 2020.
The Future of Lending with Zac Prince of BlockFi
- BlockFi operates in asset-backed lending by offering USD loans collateralized by Bitcoin and Ethereum, with loan-to-value ratios currently at 35% and one-year terms. - The lending market in crypto comprises four distinct buckets: USD lending against crypto collateral, Bitcoin borrowing for short positions, on-exchange margin lending, and outright scams. - Zac Prince's prior experience in peer-to-peer online lending informed BlockFi's model; the online lending industry shifted from retail-focused to institutionally backed but successfully complemented traditional banking rather than replacing it. - Risk management includes 72-hour margin call windows, automated liquidation processes, and full custody partnerships with Gemini; most clients cure margin calls rather than face liquidation. - Borrowers use these products primarily for wealth management—optimizing asset diversification, deferring capital gains taxes, and accessing investment interest expense deductions. - International expansion is accelerated; 40% of website traffic and loan applications already come from outside the US, with tokenized USD lending planned before end of 2019.