Former BlockFi CEO Blames FTX and Alameda Research for Company’s Bankruptcy
Zac Prince, the former CEO of BlockFi, testified at Sam Bankman-Fried’s criminal trial, accusing FTX and its sister trading firm Alameda Research for the downfall of his company. Prince claimed that he was misled by fake documents presented by the companies, and that both FTX and Alameda are responsible for BlockFi’s bankruptcy. He stated that he was not aware of the false balance sheets being used, despite conducting due diligence. Prince emphasized that BlockFi never made loans without proper due diligence. He also revealed that BlockFi had $1.1 billion on the defunct FTX exchange. When asked why BlockFi filed for bankruptcy, Prince simply attributed it to “Alameda and FTX.”
BlockFi’s Reluctance to Lend Funds to Alameda
Prince clarified that if BlockFi had known that Alameda Research was using FTX customer funds, it would not have lent funds to them. Although BlockFi called back some loans given to Alameda, there was still an outstanding amount of $650 million collateralized with Greyscale Trust and Robin Hood. This decision was deemed inappropriate by Prince.
Factors Contributing to BlockFi’s Bankruptcy
BlockFi filed for Chapter 11 bankruptcy protection in November after the collapse of FTX. The crypto lender needed to restructure its business and operations while preserving client value and pursuing recoveries on counterparty obligations. Mark Renzi, Managing Director of Berkeley Research Group, identified two factors contributing to the collapse: the declining state of the crypto market overall and the collapse of FTX.
Hot Take: A Challenging Legal Battle for BlockFi
The ongoing criminal trial involving Sam Bankman-Fried and BlockFi has shed light on the alleged role of FTX and Alameda Research in the downfall of the cryptocurrency lending platform. Former CEO Zac Prince’s testimony has raised serious accusations against these entities, claiming that they misled him with fake documents. The trial continues to uncover crucial details about BlockFi’s bankruptcy and the underlying factors that led to its collapse. As the legal battle unfolds, it remains to be seen how this case will impact the reputation and future of both BlockFi and the accused parties.
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