BlockFi Failure Due To Neglect Risks Of Intimate Exposure To FTX And Alameda
Key Points:
- BlockFi’s creditors have accused the platform’s management of ignoring risk warnings to expose FTX and Alameda Research.
- BlockFi had about $1.2 billion in assets tied to FTX and Alameda when the company declared bankruptcy.
- Director Zac Prince is said to have dismissed the group’s concerns about lending Alameda $217 million in August 2021.
BlockFi’s demise stemmed from the company leaders ignoring warnings about potential risks associated with FTX and Alameda Research, as revealed in documents filed on July 14.
According to Bloomberg, BlockFi’s creditor committee said in a newly published report that this crypto lender executives ignored their risk management team’s repeated warnings about not granting large loans to Alameda Research.
The report attributed the failure of BlockFi to the fault of CEO Zac Prince and other senior executives. The creditors’ findings were published on Friday.
The commission said that as early as August 2021, the crypto lender had a copy of Alameda’s balance sheet showing that the company relies heavily on FTT, a digital token created by FTX. Alameda’s overreliance on FTT “has raised alarm bells at BlockFi,” but Prince ignored those concerns.
The report quoted Prince as saying in an email that Alameda represents “the biggest/most obvious growth opportunity we have.”
In addition to being accused of ignoring warning signs from FTX, the commission also stated that BlockFi’s business is “fundamentally flawed” as it needs riskier investment partners to turn a profit high for customers.
This means that BlockFi can only do business with a few companies, such as Alameda, that can turn a profit high enough. And just a few days ago, BlockFi released its investigative report, saying that management conducted due diligence before providing loans to FTX.
The failed crypto lender had approximately $1.2 billion in assets tied to FTX and Alameda Research when it filed for bankruptcy in November 2022.
The lending platform directly cited FTX exposure as the reason for filing for bankruptcy. FTX’s FTT token-based mortgage lending has left many companies on the hook after the token price fell from more than $25 to less than $2 amid Chapter 11 filings and reporting issues.
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.
Author
News
BlockFi Failure Due To Neglect Risks Of Intimate Exposure To FTX And Alameda
Key Points:
- BlockFi’s creditors have accused the platform’s management of ignoring risk warnings to expose FTX and Alameda Research.
- BlockFi had about $1.2 billion in assets tied to FTX and Alameda when the company declared bankruptcy.
- Director Zac Prince is said to have dismissed the group’s concerns about lending Alameda $217 million in August 2021.
BlockFi’s demise stemmed from the company leaders ignoring warnings about potential risks associated with FTX and Alameda Research, as revealed in documents filed on July 14.
According to Bloomberg, BlockFi’s creditor committee said in a newly published report that this crypto lender executives ignored their risk management team’s repeated warnings about not granting large loans to Alameda Research.
The report attributed the failure of BlockFi to the fault of CEO Zac Prince and other senior executives. The creditors’ findings were published on Friday.
The commission said that as early as August 2021, the crypto lender had a copy of Alameda’s balance sheet showing that the company relies heavily on FTT, a digital token created by FTX. Alameda’s overreliance on FTT “has raised alarm bells at BlockFi,” but Prince ignored those concerns.
The report quoted Prince as saying in an email that Alameda represents “the biggest/most obvious growth opportunity we have.”
In addition to being accused of ignoring warning signs from FTX, the commission also stated that BlockFi’s business is “fundamentally flawed” as it needs riskier investment partners to turn a profit high for customers.
This means that BlockFi can only do business with a few companies, such as Alameda, that can turn a profit high enough. And just a few days ago, BlockFi released its investigative report, saying that management conducted due diligence before providing loans to FTX.
The failed crypto lender had approximately $1.2 billion in assets tied to FTX and Alameda Research when it filed for bankruptcy in November 2022.
The lending platform directly cited FTX exposure as the reason for filing for bankruptcy. FTX’s FTT token-based mortgage lending has left many companies on the hook after the token price fell from more than $25 to less than $2 amid Chapter 11 filings and reporting issues.
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.
Other Posts
Related Posts
News
Address Error Results in $68 Million WBTC Loss, Victim Falls to Phishing Scam
Knowledge
US Election Predictions: The Effects And Importance Of The New US President
News
