BlockFi CEO Withdraws Over $10M Prior to Bankruptcy Filing

Troubled crypto platform BlockFi which filed for Chapter 11 bankruptcy in New Jersey two months ago following the implosion of the FTX Exchange has revealed new information about its top executive.

According to the bankrupt digital asset lender, its Chief Executive Officer (CEO) Zac Prince withdrew more than $10 million from the platform after receiving a $400 million credit line from FTX in a definitive agreement.

Per a published presentation made by BlockFi, Prince engaged the funds to offset tax which was categorized as a ‘litigation settlement payment’. 

The funds were taken in two successions; the first withdrawal worth $9.3 million was done in April 2022 and the second $1.36 million was cashed out in August 2022 after receiving the FTX credit facility. 

BlockFi Executives Plunge in Personal Assets

At the beginning of the second half of last year, Zac Prince shared with his 71k followers on Twitter the exciting plan to “broadened the scope of the initial deal for the benefit of major BlockFi stakeholders” with FTX. In his tweet, he confirmed that FTX had inked a definitive agreement for a $400 million credit facility. This fund was meant to ensure the continuity of its operations. 

“To protect clients’ funds, BlockFi executed a transaction in which FTX committed to loan $400 million in cryptocurrency on a junior basis to BlockFi’s obligations to its clients, enabling BlockFi to process billions of dollars in clients’ requested withdrawals and other transactions between June and November 2022,” the company’s recent publication stated.

Additionally, FTX’s plan to acquire BlockFi at $240 million as against the $850 million offered by crypto lender Nexo was also mentioned. After the liquidity crunch faced by FTX and a consequent contagion for BlockFi, its management team began to deploy personal funds and assets on the platform to trade, earn interest and hold crypto like its other regular clients.

This style of investment conferred these executives with clients’ benefits. The CEO of BlockFi was one of those who took on this form of investment, laying aside a substantial amount of his assets on the platform. This explanation by BlockFi goes to clarify the massive withdrawal that he made from the platform and might be the basis upon which the CEO will seek to clear his name.