The sensitivity of BlockFi to FTX was higher than what had previously been disclosed. As FTX, which had committed to help the ailing lender before its own fall, failed in late November, the company turned to bankruptcy protection.
Assets connected to FTX are valued at $415.9 million while loans to Alameda are valued at $831.3 million in the balance displayed in the unredacted BlockFi file. These reflect data as of January 14. The November bankruptcy of FTX included both of Bankman-businesses, Fried’s which shocked the cryptocurrency markets.
The loan to Alameda, according to lawyers representing BlockFi, is worth $671 million, and there are also $355 million in frozen digital assets on the FTX platform. Since then, ether and bitcoin have risen in price, increasing the value of such assets.
The creditor committee’s consultant M3 Partners put together the financial presentation. The company is completely made up of BlockFi customers who are owed money by the insolvent lender, and it is represented by the law firm Brown Rudnick.
The declassified filing was submitted accidentally, a lawyer for the creditor committee told CNBC, but he did not provide any further comments. An inquiry for comment was not answered by BlockFi’s legal counsel.
Once the news was published, a BlockFi spokesperson issued a statement claiming that the company “prioritized transparency.”
“BlockFi has disclosed accurate information to the Court as part of our Statement of Financial Affairs, which was filed on January 12, 2023,”said the representative.
Further details on BlockFi now include the company’s customer base, in-depth information about the size of their accounts, and trading volume.
About 73% of the 662,427 users of BlockFi have financial accounts under $1,000. These clients traded a total of $67.7 million in the six months from May to November of last year, when the overall volume was $1.17 billion. According to the presentation, BlockFi generated trading revenue of little over $14 million over that time, averaging $21 per customer.
In addition to wallet substantial assets $366.7 million, the corporation had a reserve of cash of $302.1 million. According to the presentation, the crypto lender has unadjusted assets totaling roughly $2.7 billion, with nearly half linked to FTX and Alameda.
Exposure to Three Arrows Capital, a cryptocurrency hedge fund that sought bankruptcy protection in July, sparked BlockFi’s demise. Via a $400 million revolving credit line, FTX had set up a bailout plan for BlockFi, but that arrangement collapsed when FTX had its own cash crunch and quickly went bankrupt.
The amount of the Alameda loan receivable and the assets linked to FTX have both been lowered to zero based on the most recent BlockFi financials provided. BlockFi has assets totaling slightly under $1.3 billion after all modifications, of which only $668.8 million is categorized as “Liquid / To Be Distributed.”
The petition reveals that as a component of the suggested retention plan intended to keep some workers on board during the bankruptcy process, BlockFi’s 125 active employees are being paid generously.
The combined compensation for the retained workers will total $11.9 million per year. Three employees who work in delivering results are among the remaining team members, and they will each receive an annual average salary of more than $134,000.
According to the presentation, the average salary of the five workers who are still working for the company is $822,834, demonstrating that BlockFi’s retention “plans are larger than comparable crypto cases.”
Information from CNBC