BlockFi’s Uncensored Financial Report Reveals $1.2B Exposure to FTX

An uncensored financial report which was published unknowingly by bankrupt crypto lending platform BlockFi has revealed that the firm has up to $1.2 billion exposure to FTX and its sister trading firm Alameda Research. This is a call for concern as BlockFi’s previously uploaded report suggested an even lower exposure to the bankrupt exchange. 

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Initially, BlockFi’s lawyers quoted an outstanding loan to Alameda Research at $671 million and an additional $355 million frozen figural assets on the FTX exchange. Noteworthy, the rallying price of Bitcoin (BTC) and Ether (ETH) has raised the value of these holdings. From the secret financial report, FTX owes BlockFi up to $415.9 million while its sister trading venture owes $831.3 million in loans.

Markedly, the document was curated by investment and advisory firm M3 Partners which is an advisor to the creditor committee.

One of BlockFi’s creditor committee lawyers confirmed that the unredacted document was published by mistake but made no comment on the content of the financial report. The original redacted document shows the creditor committee’s displeasure about BlockFi’s plan to pay employees up to $12.3 million in retention payments.

In addition, the redacted document contains “trade secret[s] or confidential research, development, or commercial information.” 

FTX Rescued BlockFi From Initial Bankruptcy 

Last year, the massive crypto winter which led to the loss of over $2 trillion in the crypto industry, pulled BlockFi alongside. Its exposure to bankrupt crypto exchange Three Arrow Capital (3AC) led to a 20% slash in its employee headcount. When BlockFi hit rock bottom in the first half of 2022, FTX came as its savior offering a $250 million loan bailout

Zac Prince, Chief Executive Officer (CEO) of BlockFi tweeted  “The proceeds of the credit facility are intended to be contractually subordinate to all client balances across all account types (BIA, BPY & loan collateral) and will be used as needed,” while also appreciating his team for its performance during that time.

In the next few weeks, Prince announced an additional $400 million credit line from FTX and a plan of the latter to acquire the distraught crypto firm for $240 million. This helped BlockFi to avoid bankruptcy at the time but the collapse of FTX in November finally led to a Chapter 11 bankruptcy filing in New Jersey.

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