Blockfi CEO Zac Prince testified Friday that the downfall of FTX contributed to his company’s bankruptcy. Prince appeared as a government witness in the fraud trial of former FTX boss Sam Bankman-Fried (SBF).
Blockfi’s Prince: Loans Wouldn’t Be Approved Knowing Alameda Used FTX Clients’ Funds
Blockfi’s Prince informed federal prosecutors that his company had loaned as much as $1.1 billion to Sam Bankman-Fried‘s trading company, Alameda Research. He stated that Blockfi wouldn’t have sanctioned the loans if they had been aware that Alameda was utilizing FTX client funds.
“No,” Prince responded when queried if he knew Alameda was using FTX customer funds. “That’s not appropriate,” he added. The trial’s testimony was covered by Inner City Press reporter Matthew Russell Lee and was broadcast on the social media platform X (formerly Twitter).
The loans were backed by assets that drastically depreciated in value following FTX’s bankruptcy, as per Prince’s testimony. Blockfi had $350 million stuck on the FTX platform at the time of its collapse. Coupled with the problematic Alameda loans, Blockfi found itself in debt of more than $1 billion to creditors.
Prosecutors in the Bankman-Fried case argue that SBF covertly moved client funds from FTX to offset losses at Alameda Research. In the trial, the government contends that these unauthorized transfers rendered FTX incapable of fulfilling customer withdrawal requests. Prince mentioned that he had direct conversations with Alameda’s top officials about their financial standing, including discussions with Bankman-Fried.
Alameda had previously stated that its FTX loans originated from other cryptocurrency lenders. Prince now suspects those claims were inaccurate. The government posits that the purported fraud by Bankman-Fried devastated companies like Blockfi and obliterated billions in customer assets. Prince’s testimony shed light on the interactions between FTX and Alameda.
Beyond the testimony of Blockfi’s CEO, federal prosecutors presented balance sheets as proof. Prince’s comments came after the testimony of Caroline Ellison, Alameda’s former CEO, who alleged that Bankman-Fried instructed her to engage in fraudulent activities. Blockfi declared bankruptcy in November 2022.
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