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BlockFi Has $1.2 Billion Exposure to FTX, Report Claims

2 mins
Updated by Ryan Boltman
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In Brief

  • A leaked financial report revealed BlockFi's $1 Billion exposure to FTX and Alameda.
  • The report differs from the latest redacted version, but BlockFi claims it has always been transparent.
  • Senator Elizabeth Warren called on Congress on Jan. 25, 2023 to give crypto oversight agencies greater enforcement power to test the resilience of crypto companies.
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A CNBC report claims that BlockFi has over $800 million in loans to Alameda Research and $416 million in assets connected to the bankrupt exchange FTX.

According to CNBC, these numbers are valid as of Jan. 14, 2023, and are not shown in previously redacted financials. BlockFi creditor committee adviser M3 Partners compiled the report.

BlockFi Defends Transparency in Financial Report

BlockFi’s initially said that Alameda’s loan was worth $671 million, with an additional $350 million of crypto assets on FTX that were frozen after the company filed for bankruptcy. Rallying crypto prices are likely responsible for the increase in the value of both amounts.

According to the CNBC, BlockFi had about $300 million in cash and held $367 million in crypto wallets as of mid-January 2023. Later financials reveal that the lender had $1.3 billion in assets, roughly half of which are liquid.

BlockFi told The Block that it has always been transparent and denied that the leaked report revealed “secret” financial information. The lender filed for Chapter 11 bankruptcy in late November 2022.

At their peaks, FTX and former CEO Sam Bankman-Fried had looked to bail out several crypto firms stung by the collapse of the TerraUSD stablecoin ecosystem, extending a $400 million credit line to BlockFi.

BlockFi recently sued Sam Bankman-Fried for his 56 million Robinhood shares pledged as collateral for a BlockFi loan to Alameda before FTX filed for bankruptcy on Nov. 11, 2022. Bankman-Fried had reportedly borrowed money from Alameda to buy the shares through Emergent Fidelity, where he owned a 90% stake. 

U.S. Federal Prosecutors recently seized the shares as they build up to Bankman-Fried’s Oct. 2023 trial date, where he faces eight fraud and money-laundering-related criminal charges. He is essentially under house arrest at his parents’ Palo Alto, California home.

Elizabeth Warren Tirade Reveals More of the Same

After the FTX collapse, several U.S. lawmakers have exposed or reinforced their stance on cryptocurrencies.

Rep. Tom Emmer (R-Minnesota), a firm crypto proponent and the host of the first cryptocurrency town hall, has championed the potential of Web 3 in the creator economy together with Rep. Ro Khanna (D-California).

Sens. Elizabeth Warren (D-Massachusetts) and Bernie Sanders (D-Vermont) have co-drafted a bill to complicate the entry of banks into the crypto space. Warren wrote an op-ed for the Wall Street Journal shortly after the FTX collapse, calling for stiffer crackdowns on crypto fraud by the U.S. Securities and Exchange Commission, the U.S. Department of Justice, and the U.S. Treasury Department. 

She echoed those sentiments at the American Economic Liberties Project and the Americans for Financial Reform event on Jan. 25, 2023.

She also dismissed claims of economic emancipation touted by former Celsius CEO Alex Mashinsky.

“For all their talk of innovation and financial inclusion, crypto industry giants — from FTX to Celsius to Voyager — are collapsing under the weight of their own fraud, deceit and gross mismanagement,” she said at the event. 

While praising the SEC’s recent numerous enforcement acts in the last year, she said Congress must give the agencies greater enforcement power, concluding that the crypto industry’s ability to deliver on its promises of innovation amid strict enforcement will improve its credibility.

For Be[In]Crypto’s latest Bitcoin (BTC) analysis, click here.

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David Thomas
David Thomas graduated from the University of Kwa-Zulu Natal in Durban, South Africa, with an Honors degree in electronic engineering. He worked as an engineer for eight years, developing software for industrial processes at South African automation specialist Autotronix (Pty) Ltd., mining control systems for AngloGold Ashanti, and consumer products at Inhep Digital Security, a domestic security company wholly owned by Swedish conglomerate Assa Abloy. He has experience writing software in C,...