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Taking the witness stand at Sam Bankman-Fried’s criminal trial, BlockFi’s former Chief Executive Officer (CEO) Zac Prince has pointed accusing fingers at FTX and its sister trading firm Alameda Research for the downfall of his company, per an X post from Inner City Press.
Former BlockFi CEO on the Witness Stand
As the second week of Bankman-Fried’s criminal trial draws to a close, the former BlockFi CEO testified stating how he was misled by the fake documents that were presented by the companies. Zac Prince claimed that both companies are responsible for BlockFi’s bankruptcy, citing that he was not aware of the false balance sheets that were being used even though due diligence was conducted.
According to BlockFi’s CEO, no funds would have been released if he had been privy to that information. Markedly, Prince explained that BlockFi never make loans without performing due diligence.
Furthermore, he told prosecutors that BlockFi had a total of $1.1 billion on the defunct FTX exchange. When he was asked why BlockFi filed for bankruptcy, he responded simply by labeling “Alameda and FTX.”
Prince was also asked if his now-beleaguered cryptocurrency lending platform would have lent funds to Alameda had it known it was using FTX customer funds, he clarified that it was inappropriate, therefore, BlockFi would not have availed Alameda Research of the funds at the time.
At a point, BlockFi called some of the loans that it had given to Alameda but there was still an outstanding of $650 million which was collateralized with Greyscale Trust and Robin Hood.
Underlying Factors in the Bankruptcy
BlockFi filed for Chapter 11 bankruptcy protection in November, right after FTX collapsed. The move to file for bankruptcy was necessary for the crypto firm to commence a restructuring of its business and operations as well as to preserve client value while pursuing recoveries on counterparty obligations. At the time, its problems were attributed to a contagion of FTX implosion.
Mark Renzi, Managing Director of Berkeley Research Group which was hired to look into BlockFi’s bankruptcy, stated that there were two factors that contributed to the collapse of the crypto lender. One was the broad declining state of the crypto market while the other was the collapse of FTX.
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