SBF Trial Hears Ex-BlockFi CEO Discuss Alameda Loans
The CEO of BlockFi, like Genesis, claims that his company was given insufficient information on Alameda’s loans by FTX.
Former BlockFi CEO and defendant in the trial of Sam Bankman-Fried, Zac Prince, spoke in court on Friday.
The CEO disclosed the extent of his loans to Alameda Research, the exchange’s sister trading desk, and shared what he knew about the firm’s financial health.
According to paraphrased testimony obtained by Inner City Press, Prince said that of the “five to ten billion dollars” in total loans made by BlockFi, $50 million went to Alameda initially. He said the figure rose from $50 million to $1.1 billion between May 2021 and May 2022.
Then, disaster hit when the LUNA ecosystem collapsed, Three Arrows Capital went into default on the business, and competing platforms like Celsius and Voyager were frozen. As a result, BlockFi coordinated a $400 million credit line with FTX and started planning for a possible complete acquisition of the exchange.
After Alameda returned its first debt to BlockFi upon recall in July 2022, the company still owed BlockFi $850 million between July and November 2022. Prince said that his firm was aware of Alameda’s loans from “other lenders,” but was unaware of FTX’s involvement until after the fact.
“They would have been insolvent,” he claimed, adding that if he had known such loans existed or that Alameda was utilizing FTX customer monies, he never would have provided money to the firm.
If BlockFi had made any loans to Sam Bankman-Fried, he added, they would have been wary. BlockFi attempted to recall its loan again in November when the price of FTT dropped, but was only able to recover a portion of its original investment.
BlockFi has an additional $350 million available on the FTX market. The bankruptcy of Prince’s business was eventually attributed to both companies, according to Prince.
During her cross-examination, ex-Alameda CEO Caroline Ellison acknowledged misleading other major creditors, including Genesis, about the company’s financial health.
Creditors of BlockFi claim that Zac Prince was aware of Alameda’s terrible financial sheet, which was mostly consisted of illiquid FTT tokens as early as 2021. This token was used as security for a number of loans made to Alameda.