Secret BlockFi Financials Reveal $1.2 Billion Exposure to FTX

Bankrupt cryptocurrency lender BlockFi accidentally revealed a previously redacted copy of its balance sheet indicating that it had over $1.2 billion in assets tied to FTX and Alameda Research.

BlockFi, which filed for bankruptcy in November citing massive exposure to FTX, accidentally revealed secret financial documents relating to its association with FTX and Alameda Research, according to reports by CNBC. According to one of the filings, the redacted sections include “trade secret[s] or confidential research, development, or commercial information.” The previously redacted financials show that BlockFi has a relationship with Sam Bankman-Fried’s crypto empire worth $1.2 billion, far more significant than previous disclosures indicated. 

The unredacted filings show that as of January 14, BlockFi has assets linked to FTX worth $415.9 million and loans to Alameda worth $831.3 million. BlockFi’s legal representatives previously disclosed that the firm had $355 million in digital assets tied to FTX and loans worth $671 million to Alameda.

The former censored version of the financials leaked during a presentation by M3 Partners – an advisor to the creditor committee who admitted that uploading the unredacted filings was done erroneously. The redacted financial declarations released on November 24 relate to the creditor committee’s objection against BlockFi’s wishes to pay its key employees $12.3 million in retention incentives despite the firm’s limited operations and assets.

BlockFi’s Entanglement with FTX

When the details surrounding FTX came to light, and the firm declared bankruptcy, BlockFi attempted to separate itself from FTX and Alameda Research. A separation has proven difficult as the financial entanglement between BlockFi and FTX is complicated.

BlockFi became financially involved with FTX in June 2022 when FTX agreed to extend BlockFi a credit line of $400 million. The credit line, however, gave FTX the option to purchase BlockFi. BlockFi had to extend its credit line about a week after the firm cut its staff by around 20% due to “the dramatic shift in macroeconomic conditions worldwide.” After only a few days of FTX’s collapse, BlockFi suspended withdrawals, admitting it had “significant exposure” to FTX, including undrawn amounts from the credit line and assets held on the FTX platform.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.