BlockFi said CEO cashed out nearly $10 million as FTX loan stabilized clients

Bankrupt crypto lender BlockFi said its CEO cashed out close to $10 million from the platform to pay taxes last year as FTX provided about $15 million in payments to certain insider accounts as part of a confidential settlement.

Thanks to a $400 million loan from FTX, CEO Zac Prince was able to withdraw around $9.2 million from BlockFi in April 2022, according to a presentation BlockFi released outlining the progress, schedules and proposed agenda of its ongoing court case. 

Prince withdrew an additional $1.36 million at then-market prices in August. He used the funds to pay taxes, the company said.

In June, after sector-wide contagion caused material withdrawals from platforms across the industry, FTX provided the $400 million loan to BlockFi so the company would be able “to process billions of dollars in clients’ requested withdrawals and other transactions between June and November 2022.”

BlockFi is one of several companies that took loans out from FTX, which itself filed for bankruptcy in November.

By the company’s own disclosure, its management team “deployed their personal assets on the platform, to trade, earn interest, and store different cryptocurrencies under the same terms of service as clients,” thus transmitting to them client benefits from the FTX bailout.

“Like many BlockFi clients, Zac deployed his own personal assets on BlockFi’s platform. Zac kept a substantial portion of his assets on the platform, and the withdrawal he made in April 2022 was to pay U.S. federal and state taxes. Zac and other insiders did not make any withdrawals since October 14, 2022, and no withdrawals of [greater than] 0.2 BTC in value since August 17th,” BlockFi told The Block in an emailed statement.

FTX provided an additional $15 million to BlockFi insiders in June after a counterparty threatened litigation. “Due to the structure of the settlement, certain payments from BlockFi were routed through the executives and ultimately made to the counterparty,” according BlockFi.  

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