BlockFi CEO Zac Prince blamed the collapsed FTX crypto exchange and its sister trading firm Alameda Research for his own firm's bankruptcy while testifying in court at Sam Bankman-Fried's criminal trial, stating he would have never have dolled out funds had he known false balance sheets were being used.
Prince told prosecutors that BlockFi had a total of $1.1 billion on the exchange. When prosecutors then asked Prince why BlockFi declared bankruptcy, he attributed it to Alameda and FTX, according to Inner City Press.
When asked if BlockFi would have lent funds to Alameda had it known it was using FTX customer funds, Prince responded by saying, "No. That is not appropriate," Inner City Press said. Prince said that BlockFi called some of the loans, but that there had been $650 million still outstanding.
"They posted as collateral Grayscale Trust and Robinhood," Prince added.
Prince testified on Friday as Bankman-Fried's trial hurdles toward the end of its second week. The case is expected to last about six weeks, and the former FTX CEO faces decades in prison if he is convicted on a slew of charges, including fraud, over allegations that he and other FTX executives used billions of customer assets to make their own failed investments. FTX filed for bankruptcy protection late last year.
The crypto lender filed for bankruptcy protection in Nov. 2022, shortly after the collapse of FTX. Some of its biggest creditors included FTX.US and the Securities and Exchange Commission.
BlockFi is currently working through its bankruptcy process. The firm issued a statement last month urging eligible parties to vote to accept the bankruptcy plan by a Sept. 11 voting deadline. According to BlockFi, the successful approval of the plan will "bring these chapter 11 cases to a fair and value‑maximizing conclusion that will return client funds as quickly as possible."
Disclaimer: The former CEO and majority shareholder of The Block has disclosed a series of loans from former FTX and Alameda founder Sam Bankman-Fried.
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