The second week of Sam Bankman-Fried’s legal trial for fraud concluded with witness testimony from Zac Prince, whose crypto lending agency BlockFi loaned $1.1 billion to Alameda earlier than FTX’s collapse.
From Alameda’s weird $65 billion “credit score line” on FTX buyer crypto to $100 million Chinese language bribes, SBF gave the orders in accordance with ex-staffers and members of Bankman-Fried’s internal circle.
SBF shared far-off hopes of beginning a brand new firm as Ellison admitted FTX and Alameda’s fraud to nearly 30 workforce members, certainly one of whom recorded the entire affair and would ultimately submit the audio clip as proof to federal prosecutors, per InnerCityPress.
With at the very least two authorities witnesses to go by trial day eight, CEO of crypto lender BlockFi Zac Prince resumed his testimony. On day seven of proceedings, Prince stated BlockFi loaned $800 million to Alameda and went bust when Bankman-Fried’s crypto empire tumbled.
Alameda and 3AC loans crashed BlockFi says CEO Prince
BlockFi opened lending to SBF’s buying and selling agency in early 2021 in accordance with Prince, and the lending home performed due diligence with know-your-customer (KYC) checks. KYC utilized to each retail and institutional purchasers, extra for the latter Prince added.
Per Prince’s testimony, Alameda borrowed had initially borrowed $50 million from BlockFi by Could 2021.
A 12 months later, BlockFi had issued over $1 billion in open-term loans to SBF’s so-called hedge fund. It was round this era that Terra’s ecosystem collapsed prompting defaulted loans owed to Prince’s lender.
Three Arrows Capital (3AC) left BlockFi with heavy losses and the corporate recalled $650 million in loans disbursed to Alameda when FTT’s value dipped considerably. BlockFi additionally had $350 million caught on FTX because the crypto change stopped withdrawals in November 2022.
Alameda offered shares in Robin Hood and Grayscale’s Bitcoin Belief (GBTC) as collateral to BlockFi, Prince informed the court docket.
Caroline Ellison’s testimony talked about a whole lot of thousands and thousands borrowed from different lenders like Celsius, Genesis, and Voyager. These loans had been repaid utilizing person belongings deposited on FTX, per a number of witness accounts.
Concerning the failed FTX-BlockFi merger, the witness stated phrases included a future acquisition and an prolonged credit score line.
We determined if we might deliver extra capital in to assist with client confidence, it will be good. FTX proposed a deal, that had two components – a $400 million credit score facility and for FTX to amass BlockFi in July 2023. Nevertheless it by no means occurred.
Zac Prince, BlockFi CEO
In hindsight, BlockFi’s Prince opined that Alameda would by no means have acquired loans from lenders if FTT’s danger and remedy of FTX buyer belongings had been disclosed to the general public.
Week 2 of SBF’s trial closed by 12:30 p.m. New York time. Choose Lewis A. Kaplan adjourned proceedings till Oct. 16. Prosecutors have three extra witnesses to name together with FTX’s ex-director of engineering, Nishad Singh.