Zac Prince said that under the current conditions, Alameda should be bankrupt, but BlockFi was ignorant of this.
The criminal prosecution of former FTX CEO Sam Bankman-Fried resumed on October 13 with evidence from BlockFi CEO Zac Prince.
Prince testified the day before about his company’s loan arrangement with Alameda Research. He testified recently on how Alameda took the lead in BlockFi lending, and how he had conversations with both FTX and Alameda as loan sizes increased.
The total amount of money that BlockFi has loaned to its customers is reported by Prince to have been between $5 billion and $10 billion. Beginning in early 2021, Alameda Research borrowed $10 million; by May of that year, the company had borrowed $50 million; by May of the following year, it had borrowed $1.1 billion.
According to a story from the middle of 2022, Prince said that BlockFi had sought to have FTX buy it. Even though the transaction never went through, Prince acknowledged that BlockFi’s decision to lend money to Alameda was impacted by the deal with FTX as a “data point.” He denied that the deal was the only reason for BlockFi to make a loan to Alameda.
The Q2 2022 financial statement for Alameda was then given to Prince by the prosecutors. Although Prince was aware of the document, he said he was advised its contents did not pertain to loans between FTX and Alameda but rather to loans from other crypto lenders.
If Prince had known that FTX had loaned Alameda many billions of dollars, he claims that BlockFi would not have made any loans to Alameda because the company “would have been insolvent.” He continued, saying that BlockFi would not have provided money to Alameda had they realized that the company was utilizing FTX customers’ funds in this way since it is “not appropriate.”
In addition, Prince said that BlockFi would have been “concerned” if it had been aware of Alameda’s loans to Sam Bankman-Fried. Initial bankruptcy documents reveal that Bankman-Fried had borrowed at least $1 billion from Alameda on a personal basis.
Prince also testified that BlockFi sought to call some debts when the value of FTX’s FTT token dropped just before the company went bankrupt.
According to Prince, BlockFi had $350 million on FTX at the time of the collapse, while the remaining $1.1 billion was made up of outstanding loans. According to his testimony, BlockFi went bankrupt because of Alameda and FTX.
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