BlockFi CEO Testifies in SBF Trial: Firm Trusted Alameda's Solvency Based on Balance Sheet
In the ongoing SBF trial, BlockFi's CEO testifies that the crypto lender believed Alameda Research was financially sound, relying on the balance sheet they were shown.
Because Bitcoin
October 13, 2023
BlockFi CEO Zac Prince continued his testimony against former counterpart Sam Bankman-Fried on Friday, outlining how BlockFi's involvement with FTX and Alameda Research led to the firm's bankruptcy, as per a recent CoinDesk report. Prince disclosed that BlockFi initiated lending to Alameda Research in late 2020 or early 2021 with substantial loan agreements. However, the loans escalated to over $1 billion by May 2022. BlockFi began asking for repayments due to losses incurred from the Terra Luna crypto ecosystem's collapse.
Prince emphasized that BlockFi had received quarterly balance sheets from Alameda, showing ample liquid assets and solvency. Alameda had also posted collateral, including FTX's FTT token and other cryptocurrencies. BlockFi had significant outstanding loans with Alameda before the latter's collapse in November 2022, leading to BlockFi's bankruptcy less than three weeks later.
Prince confirmed BlockFi's role as a customer of FTX and its losses of over a billion dollars due to its engagement with FTX and Alameda Research.
During the trial, Prince clarified BlockFi's due diligence process, involving several attorneys, and highlighted that BlockFi customers were aware of the company's lending activities, as stated in their terms of service.
Prosecutors have been examining the awareness of FTX customers regarding the lending of their funds to Alameda, featuring testimonies from former FTX executives and employees.
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