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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.
#757 Earning Passive Bitcoin w/ Zac Prince
- BlockFi's Bitcoin rewards credit card launched in summer 2021 with 3.5% cashback for 90 days, then 1.5% ongoing; 75,000 cards activated with $2 billion in projected first-year spending. - Interest-bearing accounts and rate-setting mechanisms: BlockFi adjusts cryptocurrency and stablecoin rates monthly based on institutional and retail borrowing demand, not continuously like DeFi. - Regulatory environment: BlockFi received cease-and-desist orders from New Jersey and other states regarding interest accounts; no orders have taken effect, and Zach expects positive regulatory clarity in early 2022. - Card rewards behavior: 90% of cardholders hold all earned Bitcoin rather than selling; two-thirds have reduced spending on traditional cashback cards. - Upcoming product roadmap: merchant partner programs with elevated cashback rates, stablecoin balance payments, roundup-to-Bitcoin feature, debit card, and expanded trading (derivatives, new cryptocurrencies, staking, DeFi). - Credit card adoption metrics: average monthly card spend is $3,000 versus industry average of $1,500 for premium cards; zero waitlist as of interview date.
#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.
Tales from the Crypt #39: Zac Prince
- BlockFi offers USD loans collateralized by Bitcoin or Ether, with initial loan-to-value ratios of 35% and a 72-hour margin call window before partial liquidation. - Tax optimization strategies exist for crypto borrowers, including the investment interest expense deduction that can reduce after-tax borrowing costs by up to 40% when loan proceeds fund investments. - BlockFi has secured institutional debt funding (Galaxy deal) and aims to become the first crypto lender to raise capital from traditional banks, demonstrating the integration of crypto lending into legacy finance. - The lending industry favors state-by-state licensing or bank partnerships for compliance; BlockFi holds more lending licenses across U.S. states than competitors. - Real estate is the most common use case for BlockFi loans, allowing crypto holders to preserve upside appreciation while accessing liquidity for portfolio diversification. - Future product expansion includes lines of credit, international lending, and a Bitcoin cash-back credit card to drive mainstream adoption.