- BlockFi CEO Zac Prince testified in the federal criminal case against Bankman-Fried, blaming FTX and Alameda for the bankruptcy.
- BlockFi’s lending to FTX, at the request of Bankman-Fried, eventually led to significant losses when FTX filed for bankruptcy.
- Prince estimated the financial loss to be over “a billion dollars” and attributed the losses to Bankman-Fried’s deception and falsified balance sheets from Alameda Research.
BlockFi CEO Zac Prince testified in the federal criminal case against Bankman-Fried, blaming FTX and Alameda for the bankruptcy. Prince claimed that BlockFi’s lending to FTX, at the request of Bankman-Fried, eventually led to significant losses when FTX filed for bankruptcy.
BlockFi’s Lending to FTX
Prince revealed that BlockFi started lending money to FTX in early 2021. At Bankman-Fried’s request, BlockFi increased FTX’s borrowing later in the year. Prince disagreed with this decision but labeled Bankman-Fried as a “good borrower.” However, when cryptocurrency market conditions worsened and Terra collapsed in mid-2022, BlockFi recalled its loans.
FTX’s Bankruptcy Impact on BlockFi
FTX’s bankruptcy in November 2022 revealed that the loans from BlockFi were unrepayable. Subsequently, BlockFi declared bankruptcy as well. Prince estimated the financial loss to be over “a billion dollars” comprising $650 million in loans to Alameda Research and $350 million in customer funds, attributing the losses to Bankman-Fried’s deception.
Testimony and Defense Tactics
Former Alameda Research CEO Caroline Ellison testified that she falsified balance sheets to make FTX and Alameda appear less risky to investors. Prince stated that BlockFi would have abstained from lending had accurate balance sheets been provided. The defense, arguing Bankman-Fried’s lack of experience in the crypto industry, cross-examined Prince and highlighted the unchartered territory of cryptocurrency during that time.
Trial Proceedings and Looking Ahead
Next week, the prosecution may call FTX’s former director of engineering, Nishad Singh, and Lisa Zhang, a co-founder of Modulo Capital and former romantic interest of Bankman-Fried, to testify. Bankman-Fried, facing multiple fraud charges, has pleaded not guilty and is currently held at the Metropolitan Detention Center. Conviction could result in a maximum prison sentence of 110 years.
