The bankrupt crypto lender’s leaked financials include $831M+ in loans to Alameda Research.
Embattled crypto lender BlockFi mistakenly released financial documents that showed that it had $1.25 billion of its finances tied to FTX and Alameda Research. These figures had been redacted in BlockFi’s previous filing, and they represent a higher amount than what the bankrupt lender previously disclosed.
MacKenzie Sigalos, a CNBC reporter who reported the development earlier today, appeared on CNBC’s Squawk Box to shed more light on the report and the implications of these figures. According to her, the amount reported to have been tied to FTX represents almost half of BlockFi’s total assets.
— Squawk Box (@SquawkCNBC) January 25, 2023
Out of the $1.25 billion exposure to FTX and Alameda, BlockFi has $831.3 million in loans to Alameda Research. The remaining $415.9 million represents assets tied to FTX. “Both those figures are higher than what was previously disclosed. It’s unclear if that’s just fluctuations in crypto prices, but these guys were really borrowing back and forth,” Sigalos remarked.
She also highlighted FTX’s decision to bail out BlockFi when the crypto lender’s woes started to unfold last year. Recall that Sam Bankman-Fried, the FTX CEO then, revealed that his company had granted a $250 million loan to BlockFi. This disclosure came up a week after FTX had given a $485 million loan to Voyager Digital.
Ripple’s General Counsel, in an attempt to point out the SEC’s role in the FTX fiasco, recently highlighted that the SEC has admitted that FTX used customer funds to try and bail out BlockFi. These comments came up after BlockFi filed for bankruptcy last November, citing the contagion triggered by the FTX collapse.
Implications of the Leaked Financials
Speaking on the observed pattern of borrowings dominant within the crypto space, Sigalos said, “We are talking about yet another example of crypto companies borrowing hundreds of millions of dollars and basically not paying it back, and swapping around all this debt.”
When asked what significance this leaked information holds, Sigalos noted that such information is actually the sort of details that the public looks out for during bankruptcy proceedings, but crypto firms have always chosen to redact their documents to the extent that such crucial details are left out.
According to her, this gives any potential buyers of the company the right knowledge to make informed purchasing decisions. “If you’re trying to buy this business, these numbers are everything. And it also gives a lot more insight into how these businesses did make money or – in with BlockFi – didn’t make money.”