Blockfi CEO Testifies in Fraud Trial Against FTX Founder, Alleges Role in Company’s Bankruptcy

Blockfi CEO gives testimony in fraud trial against FTX founder

Blockfi CEO Zac Prince claims that the collapse of crypto exchange FTX contributed to his company’s bankruptcy. Prince appeared as a government witness in the fraud trial of former FTX boss Sam Bankman-Fried (SBF).

Blockfi CEO Prince: Loans would not have been approved if there was knowledge of misuse of customer funds

Prince informed federal prosecutors that his company had made up to $1.1 billion in loans to Sam Bankman-Fried’s trading firm, Alameda Research. He explained that Blockfi would not have approved the loans if Alameda was known to be using FTX’s customer funds.

Problematic loans and collapsed assets

The loans were collateralized by assets that had fallen dramatically in value following FTX’s collapse, according to Prince’s statement. At the time of the collapse, Blockfi was sitting on the FTX platform with $350 million. Together with the problematic Alameda loans, Blockfi fell into debt by more than a billion US dollars.

Bankman-Fried is accused of fraud

Prosecutors in the case allege that SBF secretly withdrew customer funds from FTX to offset losses at Alameda Research. These unauthorized transfers left FTX unable to fulfill customer withdrawal requests. Prince mentioned that he had direct discussions with Alameda’s top officials about their financial situation, including discussions with Bankman-Fried.

Doubts about Alameda’s lenders and Blockfi’s declaration of bankruptcy

Alameda had previously stated that their FTX loans come from other cryptocurrency lenders. Prince now suspects those claims were false. The government claims that Bankman-Fried’s alleged fraud severely damaged companies like Blockfi and wiped out billions in customer funds. Prince’s statement also brought to light the interactions between FTX and Alameda.

Evidence from balance sheets and statements from other witnesses

In addition to the Blockfi CEO’s statements, the federal public prosecutor’s office presented balance sheets as evidence. Prince’s statements came after testimony from Caroline Ellison, Alameda’s former CEO, who alleged that Bankman-Fried directed her to engage in fraudulent activities. Blockfi filed for bankruptcy in November 2022.

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