On Friday, BlockFi CEO Zac Prince testified that loans to Sam Bankman-Fried’s Alameda Research precipitated the crypto lender’s own bankruptcy, resulting in over $1 billion in losses.
Taking the stand again in SBF’s criminal fraud trial, Prince outlined BlockFi’s turbulent relationship as a major creditor to the now-defunct hedge fund Alameda.
He recalled first lending to Alameda in late 2020 with “robust” agreements.
According to the BlockFi CEO, loans were expected to exceed $1 billion by May 2022. When Alameda repaid amid BlockFi’s liquidity crisis from the Terra collapse, BlockFi extended $850 million in new financing. Relying on seemingly healthy balance sheets, it felt Alameda could repay.
But the FTX implosion left Alameda unable to return $650 million in outstanding loans, Prince said. BlockFi also lost $350 million in customer funds on FTX itself. The combined blow exceeded $1 billion.
Prince stated that these impaired assets ultimately forced BlockFi into bankruptcy weeks after SBF’s empire crumbled. Defense lawyers pressed him on loan details, questioning BlockFi’s due diligence.
But Prince emphasized that loans appeared safe given solid collateral and financials. Prosecutors underscored how devastation from SBF ties directly triggered BlockFi’s failure.
The dramatic testimony further detailed the domino effect of FTX’s demise. Prince made it clear his firm only fell after nursing hidden risks in its relationship with SBF entities.
His account bolstered the prosecution’s claim that SBF’s alleged deceit in handling customer funds also betrayed the trust of sophisticated crypto institutions.