BlockFi Financials Reveal A $1.2 Billion Exposure To FTX

January 25, 2023 2:24 pm Comments

It looks like BlockFi is the latest company that has been revealed to be heavily impacted by the collapse of the major crypto exchange FTX.

Crypto lender BlockFi had recently uploaded some financials by mistake where they forgot to include the redactions that contained financial information.

According to the data, it shows that BlockFi apparently had around $1.2 billion of assets that were tied up with FTX and Sam Bankman-Fried’s Alameda Research.

This was quite surprising because the number was much larger than expected which further explains why the crypto lender filed bankruptcy following the collapse of FTX.

It is rather interesting that the exact financial information was accidently released months later during a time when the crypto markets are making a recovery.

CNBC reports:

The balance shown in the unredacted BlockFi filing includes $415.9 million worth of assets linked to FTX and $831.3 million in loans to Alameda. Those figures are as of Jan. 14. Both of Bankman-Fried’s firms were wrapped into FTX’s November bankruptcy, which sent the crypto markets reeling.

Lawyers for BlockFi had said earlier that the loan to Alameda was valued at $671 million, while there were an additional $355 million in digital assets frozen on the FTX platform. Bitcoin and ether have since rallied, lifting the value of those holdings.

The financial presentation was assembled by M3 Partners, an advisor to the creditor committee.

The firm is represented by law firm Brown Rudnick and is entirely composed of BlockFi clients who are owed money by the bankrupt lender.

There was also a lot of other information that was released such as the number of users the company had and the cumulative trading volume of its clients.

It is also important to note that BlockFi also had exposure to other failing entities besides FTX.

For example, BlockFi had exposure to a hedge fund called Three Arrows Capital which filed in bankruptcy in July of last year.

Therefore, BlockFi financials were already in a bad state prior to the FTX collapse which likely made it a target for a lot of attention during the crypto winter.

With the collapse of major players like FTX, BlockFi, and many other firms, “the fat has been trimmed” and the remaining businesses that have survived are in a much better position to succeed as the industry continues to expand.

CoinTelegraph reports:

The state of financial obligations between the firms is complicated.

On Jul. 1 FTX.US — FTX’s U.S. arm — extended a $400 million line of credit to BlockFi after the lender was caught up in the contagion caused by the collapse of Terra’s algorithmic stablecoin on May 10, 2022.

The deal also provided FTX.US with the option to acquire BlockFi for “a variable price of up to $240 million based on performance triggers.”

BlockFi filed for Chapter 11 Bankruptcy on Nov. 28, citing the collapse of FTX just weeks earlier as the cause of its financial troubles.

Cointelegraph contacted BlockFi and M3 Partners for comment but did not immediately receive a response.

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