Zac Prince, the CEO of BlockFi, gave further testimony in the criminal trial involving former FTX CEO, Sam Bankman-Fried, on October 13th. Prince discussed how Alameda Research gradually became the leading force in BlockFi's lending activities, mentioning his communication with FTX and Alameda as lending amounts increased. BlockFi had lent out a substantial sum of $5 billion to $10 billion to clients, and Alameda Research had initially borrowed $10 million, which escalated to $50 million in May 2021 and then to $1.1 billion in May 2022.
Moreover, Prince acknowledged that BlockFi was also impacted by industry events, including the collapse of Luna and TerraUSD, as well as the bankruptcy of Celsius and Voyager. Prince revealed that BlockFi had considered being acquired by FTX in mid-2022, although the deal did not materialize. While the FTX arrangement influenced BlockFi's decision to lend money to Alameda, Prince clarified that it was not the sole reason for the lending.
In the trial, Prince was presented with Alameda's Q2 2022 balance sheet, and despite being familiar with it, he claimed that he had been informed that the loans listed on the sheet originated from other crypto lenders, rather than loans between FTX and Alameda. Prince expressed concern that if he had been aware of Alameda's loans to Sam Bankman-Fried, BlockFi would have been worried.
Prince also mentioned that when the value of FTX's FTT token declined during the collapse, BlockFi attempted to call back certain loans. He testified that $650 million in outstanding loaned funds were affected, with only $350 million remaining with FTX, resulting in a total impact of $1.1 billion on BlockFi. Prince attributed the bankruptcy of BlockFi to the influence of Alameda and FTX.
Additionally, Prince confirmed that the entire BlockFi team had not advised against increasing exposure to FTT tokens and explained that the company provided more loans when additional collateral was required. He revealed that BlockFi had received Grayscale Trust and Robinhood shares as collateral, with Robinhood eventually buying back those shares from the government. BlockFi had also attempted to lay claim to the shares itself in late 2022.
Following Cohen's cross-examination, the trial will resume next week, featuring testimonies from FTX associates Nishad Singh and Ramnik Arora.