BlockFi Used FTX Funds To Pay SEC Fines? Inquiries Ripple Counsel

Sam Bankman-Fried (SBF) led the FTX crash has impacted the crypto market in the worst way possible. Crypto lender BlockFi is reportedly preparing for bankruptcy filing due to its extensive exposure to FTX. However, Ripple Counsel has raised some crucial questions over the FTX-BlockFi connection and its U.S. SEC settlement.

FTX paid for Blockfi-SEC deal?

SEC in a release mentioned that it has pressed charges against BlockFi for failing to register the sales and offers of its lending product. The commission highlighted that this is the first of its kind of action taken against crypto lending platforms.

Stuart Alderoty, General Counsel of Ripple has found something fishy in the BlockFi and SEC settlement. He stated that nothing was ever “registered” as per the BlockFi/SEC deal.

He inquired about the first two payments on the $100 million fine and asked if they were ever made. Ripple General Counsel call on the SEC to show BlockFi ability to pay and their source of funds. While FTX shows a $250 million loan to the crypto lending platform. However, now customer funds are blocked.

This creates doubt that did BlockFi paid the fine and did any of the funds for that fine come from FTX.

Who paid the fines then?

Alderoty slammed the SEC for marking the BlockFi deal as another “win” for regulation by enforcement. Meanwhile, the trouble lending platform left the customers holding the bag.

David Schwartz, Ripple CTO stated that this can turn out to be worse. As BlockFi borrowing funds from FTX for paying fines can be connected to BlockFi assets being stored in the crypto exchange.

He added that the SEC may have made Blockfi financially so weak that they had no choice but to store digital assets at FTX. This may have helped them to operate and certainly led to collapse.