News

BlockFi CEO Ignored Employees’ Credit Risk Warnings And Fire Them

BlockFi filed for bankruptcy citing the impact of the crash of FTX. However, during the investigation, it was discovered that the company had many vulnerabilities before and its former employees accused the company’s executives of ignoring them when they warned about credit risks and had fired them afterwards.

Recently bankrupt crypto company BlockFi has stated in its bankruptcy filing as the collapse of FTX and the decline of the global crypto market.

But a closer look at the company’s practices shows that its vulnerabilities could have started much earlier due to missteps in risk management, including loosened lending standards, group of people highly concentrated borrowing and unsustainable trading activities.

According to Forbes, a former employee of this crypto lending platform, said that as early as 2020, the company has discouraged employees from describing risks in written internal communications to avoid liability. Meanwhile, BlockFi’s due diligence process also has flaws, according to people who have borrowed on the platform.

Credit to borrowers is determined based on their assets, but BlockFi and other lenders fail to investigate the size and quality of potential borrowers’ assets.

Another former employee also said that an internal team at BlockFi is also concerned that borrowers are too focused on crypto whales, including major hedge funds Three Arrows Capital and Alameda. But the management replied that the loan was secured.

Previously, in BlockFi’s bankruptcy filing and in public statements by CEO Zac Prince multiplied his existence through the collapse of the Terra/Luna ecosystem and the subsequent closure of Three Arrows Capital is proof of tight management.

But that stamina four months ago was exercised through a $400 million line of credit from the now-defunct FTX, allowing the company to respond to panic withdrawal requests from depositors. When FTX ended in early November, BlockFi lost its re-lending stop and could no longer respond to new waves of withdrawal requests.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

Join us to keep track of news: https://linktr.ee/coincu

Website: coincu.com

Foxy

Coincu News

Victor

Recent Posts

Altcoins in Focus: Is Qubetics the Best Pick for November 2024 Raising Over $3.2M and How It Compares With Binance and Stellar

Is Qubetics the best crypto to buy in November 2024 after raising $3.2M? Compare Qubetics…

26 minutes ago

November 2024’s Best Blockchain Innovations: Qubetics vs. Avalanche and Stellar

Discover November 2024’s top blockchain innovations! Compare Qubetics ($TICS), Avalanche (AVAX), and Stellar (XLM) to…

3 hours ago

Semler Scientific Bitcoin Portfolio Boosted by $29.1 Million

Semler Scientific Bitcoin investment has now reached 58.4% return since July 1, reflecting a significant…

4 hours ago

Kernel Secures Binance Labs Funding to Redefine Restaking on BNB Chain

Bengaluru, India, 25th November 2024, Chainwire

4 hours ago

5 Tips To Gain More Crypto Alpha On X

If you can find a crypto alpha, everything can change. Want tips on how to…

4 hours ago

VanEck Bitcoin ETF Will Remain Free of Sponsor Fees Until 2026

VanEck extends the zero-fee waiver for VanEck Bitcoin ETF (HODL) until January 2026, applying to…

5 hours ago

This website uses cookies.