Zac Prince blew up BlockFi, now wants your deposits at Galaxy One
Zac Prince of BlockFi bankruptcy fame has been named as managing director of Galaxy Digital’s new 8% APY yield product.
While slowly leading BlockFi into bankruptcy, Prince advertised interest rates on Circle’s USD stablecoin of 7.5%. Now as head of Galaxy One, he’s advertising 8% APY on USD.
With funds “generated by Galaxy’s institutional lending business,” Galaxy One promises to pay 8% APY on $25,000 minimum deposits of US accredited investors. The program is technically an investment note of a subsidiary of Mike Novogratz’s Galaxy Digital Inc. and isn’t FDIC insured.
“Expectations are clear: more yield,” wrote Prince in a press release this morning. Galaxy One customers may auto-reinvest their interest into bitcoin, ether, and solana.
Prior to BlockFi’s bankruptcy, Prince told Bloomberg, “It’s like you got strapped into a rocket ship and it’s taking off.” His startup at the time had just amassed $13 billion from customers and added Visa and Fidelity partnerships.
Non-accredited Galaxy One customers have the option of a more conservative, 4% APY cash deposit account with FDIC insurance up to $250,000.
Prince led BlockFi into bankruptcy and agreed for his company to pay $100 million in fines. BlockFi lent crypto to an assortment of degenerate institutions, including FTX, Alameda Research, and Three Arrows Capital.
Prince says BlockFi and Galaxy One are ‘night and day’
Promising to be different this time, Galaxy’s “institutional lending business” will lend out Galaxy Premium Yield customers’ assets in order to generate more than double the APY of average US high-yield savings accounts.
Galaxy digital hasn’t disclosed the full breakdown of the counterparties for its lending business.
Read more: BlockFi files for bankruptcy and sues Sam Bankman-Fried on same day
Speaking to Bloomberg, Prince promised that his risk management practices at Galaxy One are “night and day” despite “preserving a lot of the great things BlockFi did.”
He claims that there are more “risk folks” at Galaxy than there were at BlockFi.
BlockFi Interest Account customers lost money in the bankruptcy. Prince’s company was unable to return all customers’ principal after his company’s book of loans failed.
BlockFi once employed over 850 people and caused significant job losses in its November 2022 collapse.
At bankruptcy, BlockFi admitted to 100,000 creditors, with liabilities and assets ranging from $1 billion to $10 billion. Although some BlockFi interest account customers received partial repayment, payouts were calculated at a discount to the USD value of already depressed crypto prices as of the company’s bankruptcy filing.
Despite losses, Zac Prince avoided any criminal indictment
Although Prince avoided jail time for his misdeeds, another executive of a similar crypto yield company wasn’t so lucky.
Alex Mashinsky of Celsius, which offered competitive interest rates to BlockFi across much of BlockFi’s time in operation, received a 12-year prison sentence for his executive failures.
Unlike Mashinsky, Prince was never publicly known to be the subject of a criminal indictment. He and BlockFi were defendants in numerous civil proceedings, but no public record exists of a criminal indictment for his role at BlockFi.
Prince has owned and deleted at least two accounts on X, @BlockFiZac and @CostSegZac. His current handle is @GalaxyOneZac.
This morning, he advertised 8% yield to US investors.
BlockFi’s losing ties to FTX and the GBTC premium
As it filed for bankruptcy in November 2022, BlockFi sued FTX chief Sam Bankman-Fried.
Bankman-Fried had promised in June 2022 to bail out BlockFi with a $250 million capital injection.
Unfortunately, by November, BlockFi’s asset exposure to entities controlled by FTX had risen as high as $4-5 billion as Bankman-Fried’s empire collapsed into bankruptcy.
BlockFi was an arbitrageur of the once-lucrative Grayscale Bitcoin Trust (GBTC) premium.
Before the advent of spot bitcoin ETFs, accredited investors could apply for placements of GBTC shares at a substantial discount to GBTC’s heavily-inflated valuation and earn nearly risk-free returns.
This arbitrage window eventually closed, eliminating an important source of revenue for BlockFi.
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