The Unmasking of BlockFi’s Assets
In a twist that even the best thriller writers couldn’t script, bankrupt crypto lender BlockFi unintentionally became the star of its own financial drama. A recent report revealed that BlockFi’s uncensored financial documents were mistakenly uploaded, laying bare a staggering $1.2 billion in assets ensnared with the poorly fated exchange, FTX, and its shady sidekick, Alameda Research.
The Financial Breakdown: A Closer Look
According to a report by CNBC dated January 24, the unredacted filings provide a crystal-clear image of BlockFi’s plight as of January 14. They show:
- $415.9 million worth of assets linked to FTX.
- A jaw-dropping $831.3 million in loans extended to Alameda.
This unexpected disclosure came from a presentation compiled by M3 Partners, providing advisory support to the creditor committee, which has now taken responsibility for this little blunder.
Behind Closed Doors: The Confidentiality Slip
Initially, BlockFi had submitted redacted financials, attempting to shield sensitive details from the prying eyes of the public. However, the unfiltered information raises eyebrows not only about BlockFi’s financial transparency but also its operational ethics. The company’s lawyers even argued that some of the redacted information included “trade secret[s] or confidential research, development, or commercial information.”
From $355 Million to Over a Billion: What Changed?
During BlockFi’s first-day bankruptcy hearing on November 29, the numbers were touted at $355 million tied to FTX and $680 million loaned to Alameda. However, as if to rub salt in the wound, the value of these assets has inflated—thanks to an uptick in Bitcoin’s (BTC) price since then. Talk about a rollercoaster ride!
The Ripple Effect of FTX’s Collapse
BlockFi’s saga didn’t occur in isolation; it’s intricately linked with FTX’s tumultuous fall from grace. Following the fallout from the collapse of Terra’s algorithmic stablecoin back in May, FTX US extended a lifeline to BlockFi with a $400 million line of credit, due to expire on June 30, 2027, carrying a 5% interest rate. And just in case things went pear-shaped, the agreement also hinted at an acquisition of BlockFi by FTX US for a performance-dependent price of up to $240 million.
Legal Tangles Await
On November 28, just as the dust was settling, BlockFi swung into action, suing Emergent Fidelity Technologies, a holding company for Sam Bankman-Fried, demanding collateral that included shares in the popular online brokerage, Robinhood, which were promised on November 9. Let’s just say BlockFi is fully prepared to make its case as it navigates the murky waters of Chapter 11 bankruptcy filed on the same day.
