BlockFi personal expenses deliver a $1.2 billion relationship with Sam Bankman-Fried’s crypto realm

January 26, 2023: Bankrupt crypto lender BlockFi had more than $1.2 billion in assets tied up with Sam Bankman-Fried’s FTX and Alameda Research, according to previously redacted financials that were mistakenly uploaded without the redactions, on Tuesday.

BlockFi’s exposure to FTX was more than prior disclosures suggested. The firm filed for Chapter 11 bankruptcy protection in late November after the collapse of FTX, agreeing to rescue the struggling lender before its meltdown.

The balance displayed in the unredacted BlockFi filing includes $415.9 million in assets linked to FTX and $831.3 million in loans to Alameda. Those figures are as of January 14. Bankman-Fried’s firms were wrapped in FTX’s November bankruptcy, which reeled the crypto markets.

Lawyers for BlockFi had stated earlier that the loan to Alameda was valued at $671 million, while an additional $355 million in digital assets were frozen on the FTX platform. Bitcoin and ether have since rallied, which lifts the value of the holdings.

M3 Partners, an advisor to the creditor committee, assembled the financial presentation. The firm is represented by the law firm Brown Rudnick and is composed of BlockFi clients for who the bankrupt lender  owes money.

Other details available regarding BlockFi includes its customer numbers and high-level detail on the size of its accounts and trading volume.

BlockFi gained 662,427 users, of which nearing 73% had account balances under $1,000. In the six months from May to November last year, those customers had a cumulative trading volume of $67.7 million, while the total volume was $1.17 billion. BlockFi made just over $14 million in trading revenue over that period; the presentation has stated nearly $21 in revenue per customer.

The firm had $302.1 million in cash, alongside wallet assets valued at $366.7 million. The presentation shows that the crypto lender has unadjusted assets worth nearly $2.7 billion, with close to half tied to FTX and Alameda.

FTX had arranged an outgoing plan for BlockFi, through a $400 million revolving credit facility. Still, that deal fell apart when FTX faced its liquidity crisis and rapidly sank into bankruptcy. BlockFi’s failure was precipitated by exposure to Three Arrows Capital, a crypto hedge fund filing for bankruptcy protection in July.