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BlockFi CEO Zac Prince testifies to lending relationship with Alameda Analysis earlier than its collapse

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Zac Prince, the CEO of BlockFi, continued to offer testimony within the felony trial of former FTX CEO Sam Bankman-Fried on Oct. 13.

In the day past’s testimony, Prince described his agency’s lending relationship with Alameda Analysis. In present testimony, he described how Alameda started to dominate BlockFi lending actions and famous that he spoke to FTX and Alameda as loans grew bigger.

Prosecutors: “Did you discuss with Sam Bankman-Fried?”
Prince: “Sure, a CEO to CEO was instructed. So we did a name.”

Prince mentioned that BlockFi had at one level lent out $5 billion to $10 billion to its shoppers total. Alameda Analysis had initially borrowed $10 million circa early 2021, however that quantity finally rose to $50 million in Might 2021 and to $1.1 billion in Might 2022.

The BlockFi govt famous that his agency was additionally affected by different trade occasions, together with the collapse of Luna and TerraUSD (which was adopted by Three Arrows Capital’s default on its mortgage to BlockFi) in addition to the chapter of Celsius and Voyager.

Prince mentioned that BlockFi, at one level, tried to have FTX purchase it, as reported in mid-2022. Although the acquisition by no means occurred, Prince admitted that the association with FTX influenced BlockFi’s resolution to lend cash to Alameda as a “information level.” He didn’t admit that BlockFi loaned to Alameda wholly due to that association.

BlockFi was unaware of FTX’s wrongdoing

Prosecutors then introduced Prince with Alameda’s Q2 2022 steadiness sheet. Although Prince was conversant in it, he mentioned that he was informed the loans detailed on the sheet have been from different crypto lenders, versus loans between FTX and Alameda.

Prince mentioned that if he had identified of FTX’s multibillion-dollar loans to Alameda, BlockFi wouldn’t have lent cash to Alameda because it “would have been bancrupt.” He added that if he had identified that Alameda was utilizing cash that belonged to FTX clients, BlockFi wouldn’t have lent cash as that apply is “not applicable.”

Moreover, Prince mentioned that if he had identified of Alameda’s loans to Sam Bankman-Fried, BlockFi would have been “involved.” Early chapter studies counsel that Bankman-Fried personally borrowed not less than $1 billion from Alameda.

Prince additionally testified that when the worth of FTX’s FTT token fell across the time of the businesses’ collapses, BlockFi tried to name sure loans.

Prince mentioned that, on the time of the collapse, $650 million of loaned funds have been nonetheless excellent and mentioned that BlockFi had $350 million on FTX, leaving $1.1 billion affected. He testified that Alameda and FTX led to BlockFi’s personal chapter.

Cross-examination addresses finer factors

Throughout cross-examination, Bankman-Fried’s lawyer seemingly tried to attract consideration to the truth that each BlockFi and FTX lent out buyer property. Prince emphasised that BlockFi lent buyer funds “in the event that they agreed to.”

Additionally throughout that interval, Cohen requested Prince whether or not BlockFi’s workforce had suggested in opposition to growing publicity to FTT tokens. Prince replied that the whole workforce had not suggested this and mentioned that BlockFi had made extra loans when it required extra collateral.

Earlier, Prince had famous BlockFi had acquired Grayscale Belief and Robinhood shares as collateral. Cohen requested whether or not Prince was conscious of who owned these Robinhood shares. Prince replied that he “wasn’t conscious of the nuances.” Robinhood not too long ago bought these shares from the U.S. authorities after they have been seized from Bankman-Fried. In late 2022, BlockFi had tried to put declare to the shares itself.

Lastly, Cohen requested whether or not Prince was ever involved about whether or not BlockFi may go bankrupt. Prince answered {that a} CEO “should consider potentialities.”

Cohen’s cross-examination concluded at that time. The trial will proceed subsequent week, with FTX associates Nishad Singh and Ramnik Arora offering testimony.



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