What the hell is going on with crypto lending?

CNBC reported yesterday afternoon that BlockFi, the crypto wealth management platform last valued at $4.75 billion, was nearing a deal to be acquired by Sam Bankman-Fried’s crypto exchange FTX for a measly $25-$50 million, citing two sources. Three sources told CNBC that a term sheet was expected to be signed by the end of this week.

Should those figures pan out on the low end, BlockFi’s valuation would have fallen by about 99%—an enormous blow to the crypto lending startup and its investors, and likely the rest of the crypto industry. 

BlockFi CEO Zac Prince has denied the $25 million figure on Twitter, saying that he “can 100% confirm that we aren’t being sold for $25M.” A BlockFi company spokeswoman said the company “does not comment on market rumors.” 

Now, if you’re anything like me (and you very well may not be), It’s been hard to keep up with constant bombardment of bad news and disarray wreaking havoc across the crypto lending industry. I think it’s worth a brief recap.

For starters, there was the severe drop in crypto prices. Then things started to get messy. Here is a brief, likely less than perfect, timeline I put together:

• The downfall of algorithmic stablecoin Luna… A sudden slump in demand from TerraUSD caused the token to lose its $1 peg and Luna to lose its value. Losing its value as in $42 billion disappearing in a week. (You can read more about what happened here)
• Ruh, roh for Three Arrows Capital… The demise of Luna underscored some of the interwovenness in the system. Crypto hedge fund Three Arrows Capital—which once oversaw some $10 billion, owned positions in Luna, then plowed in another $200 million before the coin effectively became worthless a few days later—began to struggle. The hedge fund’s founders told the Wall Street Journal in mid-June that this turn of events had taken them off guard and that they were trying to quantify their losses.
• Ruh, roh for a bunch of other stuff that is apparently tied to 3AC… Crypto financial companies like BlockFi and Genesis start liquidating 3AC’s positions, because the hedge fund can’t meet margin calls. Voyager Digital said it may issue a notice of default for $660 million worth of crypto 3AC owes them. 
• Ruh, roh because your money is stuck now… A couple weeks ago, the Celsius Network said its customers could no longer withdraw, transfer, or swap assets (which I wrote about here). Other lenders took similar action, or reduced withdrawal limits, or the ability to do it for free around this same time period.
• Everyone cries…
• Everyone wails…
• Token prices are continuing to drop during all of this, by the way…
• 3AC doesn’t pay up… Voyager issues a notice of default to 3AC.
• You get $200 million! You get $200 million! Sam Bankman-Fried is throwing money in all directions, adding cash to balance sheets and saving crypto lending companies in trouble. 
• A very depressing/likely disconcerting blog post is written… Celsius, which is still not allowing customers to make withdrawals, says it is exploring its options, which “include pursuing strategic transactions as well as a restructuring of our liabilities, among other avenues.”
• $25 million or some other low number… Sam Bankman-Fried continues to throw money in all directions, reportedly planning to acquire BlockFi very shortly at a very low price.

If this jumbled mess didn’t confuse anyone, I’ll throw in another wrench. Three Arrows Capital also operates as a VC backer. And, interestingly, it has invested in some of the companies it hasn’t been able to pay back. 3AC joined BlockFi’s Series C round in 2020, and it participated in public company Voyager’s round of PIPE financing earlier this year. It’s also invested in a host of other crypto companies, like Jambo or Aptos.

So yes, a lot of money gets all intertwined, particularly when lending is in the mix. And risk is not always easy to track, until it’s too late—as we have learned in previous credit crises. What is a bit ironic is that, as much as crypto enthusiasts defy the weaknesses in traditional finance, it turns out crypto financial services companies suffer under the weight of a lot of those same old issues—with less regulation. There’s a lot more to dig into in terms of the underlying risk here, based on the various risk management protocols at these companies, the collateral they required funds to put up, the cash they kept on hand, etc. but that’s worth a whole separate Term Sheet.

What is evident is that this mess is likely far from over. 

According to BlockFi CEO Prince, from a podcast last week: “My best read on the situation right now and the expectation that I’m setting with the board and with the team at BlockFi is that this is not over. I think we’re going to be seeing a pace of things like this happen for more time into the future, and certainly, I encourage folks to prepare themselves or their businesses for that being a potential here.”

Say it louder for the people under 40 in the back… There’s still time to nominate someone for Fortune’s 40 under 40 list. Each year, the list highlights rising entrepreneurs, creators, innovators, executives, and more. You can find the nomination form here, and it will be open until July 8. Please consider nominating those who are driving change very quietly.

A programming note… In observance of July 4th, Term Sheet will not be in your inboxes this Monday. I have a feeling that a lot of people in crypto won’t be taking the day off. 

Until Tuesday,

Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com
Submit a deal for the Term Sheet newsletter here.

Jackson Fordyce curated the deals section of today’s newsletter.

VENTURE DEALS

- Evolved By Nature, a Boston-based activated silk biotech company, raised $120 million in Series C funding. Teachers’ Venture Growth and Senator Investment Group led the round and were joined by investors including Mousse Partners, Chanel, Jeff Vinik, The Kraft Group, Roy Disney, and Emerald Development Managers.

- Shubham Housing Development, a Gurgaon, India-based mortgage lender, raised $112 million in funding. British International Investment led the round and was joined by investors including LeapFrog Investments, Asian Development Bank, and PI Opportunities Fund. 

- Faeth Therapeutics, an Oakland-based cancer metabolism company, raised $47 million in Series A funding. S2G Ventures led the round and was joined by investors including Khosla Ventures, Future Ventures, Digitalis, KdT Ventures, AgFunder, and Cantos.

- Moon Surgical, a Paris and San Carlos, Calif.-based collaborative robotics company, raised $31.3 million in Series A funding. GT Healthcare Capital & Partners led the round and was joined by investors including Cathay Health, Johnson & Johnson Innovation, JJDC, Sofinnova MD Start, and other angels. 

- Vita Mojo, a London-based restaurant software platform for digital ordering, raised $30 million in funding led by Battery Ventures.

- TaskHuman, a Palo Alto-based digital coaching platform, raised $20 million in Series B funding. Madrona led the round and was joined by investors including Impact Venture Capital, RingCentral Ventures, Sure Ventures, USVP, Gaingels, PeopleTech Angels, Propel(x), Zoom Ventures, and other angels. 

- aware, a Berlin-based health care data company focused on chronic diseases, raised $15 million in seed funding co-led by Lakestar and Cherry Ventures. 

- Black Swan Data, a London-based data science and consumer behavior prediction company, raised $18.5 million in funding. Oxx led the round and was joined by AlbionVC.

- Sensible Care, a Santa Ana, Calif.-based online behavioral health provider, raised $13 million in Series A funding. Volition Capital led the round and was joined by Skyline Investors. 

- H2SITE, a Bilbao, Spain-based on-site hydrogen production company, raised €12.5 million ($13.1 million) in Series A funding. Breakthrough Energy Ventures led the round and was joined by investors including Equinor Ventures, ENGIE New Ventures, TECNALIA, and Capital Riesgo País Vasco and Seed Capital Bizkaia. 

- Stake, a New York-based banking services provider to renters, raised $12 million in Series A funding. RET Ventures led the round and was joined by investors including Enterprise Community Partners, Hometeam Ventures, Operator Stack, Second Century Ventures, Shadow Ventures, and Olive Tree Ventures. 

- Avant, a Hong Kong and Singapore-based cell-cultivated fish and seafood biotech company and platform, raised $10.8 million in funding. S2G Ventures led the round and was joined by investors including Blue Ocean of SWEN Capital Partners, Regal Hotels, Thia Ventures, Lever VC, CPT Capital, ParticleX, Artesian, Good Startup, and Alwyn Capital.

- HomeLister, a Santa Monica, Calif.-based online home selling platform, raised $10 million in Series A funding co-led by M13 and Homebrew. 

- Trinsic, a Salt Lake City-based infrastructure platform for developers, raised $8.5 million in seed funding. Georgian led the round and was joined by investors including Auth0 founding CEO Jon Gelsey, Okta co-founder and COO Frederic Kerrest, Kickstart Seed Fund, Founder’s Co-op, Osage Venture Partners, Forward VC, and other angels. 

- oak9, a Chicago-based cybersecurity platform, raised $8 million in additional funding. Cisco Investments and Morgan Stanley’s Next Level Fund invested in the round. 

- Ophelos, a London-based debt resolution tech platform, raised £5 million ($6.09 million) in seed funding. AlbionVC led the round and was joined by investors including Vast Ventures, Form Ventures, Connect Ventures, Fly Ventures, and other angels. 

- STRIVE, a Seattle-based muscle data platform, raised $6 million in Series A funding. Future Communities Capital led the round and was joined by investors including NFL athlete Jonathan Taylor and former NFL athlete Troy Smith.

- Fitmint, a Bengaluru-based fitness app where you earn cryptocurrency, raised $1.6 Million in seed funding. General Catalyst led the round and was joined by investors including iSeed, Kearny Jackson, Dweb3, 1947 Rise, and others.

- StyleScan, a Los Angeles-based virtual-dressing technology developer for the fashion industry, raised an additional $1 million in funding led by Clearbrook Capital.

PRIVATE EQUITY

- CleanCapital acquired BQ Energy, a Wappinger Falls, N.Y.-based renewable energy developer. Financial terms were not disclosed. 

- Glacier Point, backed by Mill Point, acquired Southern Ice Cream and Gourmet Foods, a Charlotte, N.C.-based ice cream and related products distributor. Financial terms were not disclosed. 

OTHER

- FMC Corp. agreed to acquire BioPhero, a Copenhagen-based pheromone company for insect control, for about $200 million. 

- Moët Hennessy acquired Joseph Phelps Vineyards, a St. Helena, Calif.-based winery. Financial terms were not disclosed. 

IPOS 

- IBS Software Services, a Trivandrum, India-based software solution company, is weighing an IPO in the U.S. that could value the company at more than $2 billion, according to Bloomberg. Blackstone backs the company.  

SPAC

- Etoro, a Tel Aviv-based online brokerage, withdrew its plans to go public via a merger with FinTech Acquisition Corp. V,  a SPAC.  

FUNDS + FUNDS OF FUNDS

- CIBC Innovation Banking, a Toronto-based financial partner for investors and entrepreneurs, allocated an additional $1.5 billion focused on later-stage, venture-backed companies across software, life sciences, health care and cleantech industries.

- Shore Capital Partners, a Chicago-based private equity firm, raised $291.75 million for a second fund focused on food & beverage manufacturing, distribution, packaging, and related B2B service companies.

PEOPLE

- Levine Leichtman Capital Partners, a Los Angeles-based private equity firm, promoted Josh Kaufman as head of Europe.

- Permira, a London and Menlo Park-based investment firm, hired Simon Segars as senior advisor to its technology team. Formerly, he was with Arm. 

- Tiger Infrastructure Partners, a London and New York-based investment firm, hired Andrew Harris as managing director, head of investor relations and ESG. Formerly, he was with North Sky Capital.