BlockFi secret financials show $1.2 billion tie to FTX and Alameda

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FTX collapse shakes crypto to its core.  The pain may not be over yet

The BlockFi logo and depiction of cryptocurrencies displayed on a phone screen can be seen in this illustrative photo taken on November 14, 2022 in Krakow, Poland.

Jakub Porzycki | Nurphoto | Getty Images

Bankrupt crypto lender BlockFi had over $1.2 billion in assets linked to Sam Bankman-Frieds FTX and Alameda Research, according to financial data that was previously redacted but mistakenly uploaded Tuesday without the redactions.

BlockFi’s exposure to FTX was larger than previous disclosures suggested. The company filed for Chapter 11 bankruptcy protection in late November following the collapse of FTX, which had agreed to save the troubled lender from its own collapse.

The balance disclosed in the unredacted BlockFi filing includes $415.9 million in assets associated with FTX and $831.3 million in loans to Alameda. These numbers are from January 14th. Both of Bankman-Fried’s firms were implicated in FTX’s bankruptcy in November, sending crypto markets reeling.

BlockFi lawyers had previously said the loan to Alameda was valued at $671 million, while an additional $355 million in digital assets was frozen on the FTX platform. Bitcoin and Ether have since rallied, increasing the value of these holdings.

The financial presentation was prepared by M3 Partners, an adviser to the creditors’ committee. The firm is represented by the law firm of Brown Rudnick and is made up entirely of BlockFi clients who are owed money by the bankrupt lender.

An attorney for the creditors’ committee confirmed to CNBC that the undredacted filing was uploaded in error, but declined to comment further. BlockFi’s attorneys did not respond to a request for comment.

Additional information now available through BlockFi includes customer counts and general details on the size of their accounts and trading volume.

BlockFi had 662,427 users, almost 73% of whom had a balance of less than $1,000. In the six months from May to November last year, these clients had a cumulative trading volume of $67.7 million, while the total volume was $1.17 billion. According to the presentation, BlockFi generated just over $14 million in trading revenue during that period, averaging $21 in revenue per customer.

The company had $302.1 million in cash alongside $366.7 million in assets. Overall, the crypto lender has nearly $2.7 billion worth of unadjusted assets, nearly half of which are tied to FTX and Alameda, the presentation shows.

BlockFi’s failure was prompted by exposure to Three Arrows Capital, a crypto hedge fund that filed for bankruptcy protection in July. FTX had arranged a bailout for BlockFi through a $400 million revolving credit facility, but that deal fell through as FTX faced its own liquidity crisis and quickly went bankrupt.

According to BlockFi’s latest released financial data, the value of both the Alameda loan receivable and FTX-related assets have been adjusted to $0. After all adjustments, BlockFi has just under $1.3 billion in assets, of which only $668.8 million is described as “Liquid / To Be Distributed.”

BlockFi’s 125 remaining employees will be handsomely paid under the proposed employee retention plan aimed at keeping some employees on board during the bankruptcy proceedings, the filing shows.

The retained employees will raise a total of $11.9 million on an annual basis. Among the remaining staff are three customer success associates, each of whom will take home an annual average of over $134,000.

Five employees who remain with the company make an average of $822,834, according to the presentation, showing that BlockFi’s retention plans are “larger than comparable crypto cases.”

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