Crypto

BlockFi’s secret financial data shows $1.2 billion relationship with Sam Bankman-Fried’s crypto empire

The BlockFi logo displayed on a phone screen and representation of cryptocurrencies are seen in this illustration photo taken in Krakow, Poland, November 14, 2022.

Jakub Porzycki | Nurphoto | Getty Images

Bankrupt crypto lender BlockFi had more than $1.2 billion in assets tied to Sam Bankman-Fried’s FTX and Alameda Research, according to financial data that had previously been redacted but mistakenly uploaded Tuesday without the redactions.

BlockFi’s exposure to FTX was higher than previous disclosures suggested. The company filed for Chapter 11 bankruptcy in late November, following the FTX collapsewhich had agreed to bail out the struggling lender before its own crisis.

The balance shown in the unredacted BlockFi filing includes $415.9 million in assets tied to FTX and $831.3 million in loans to Alameda. These figures are from January 14. Both Bankman-Fried companies were wrapped up in the FTX bankruptcy in November, which sent the crypto markets tumbling.

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

The financial presentation was made by M3 Partners, counsel to the creditors’ committee. The firm is represented by law firm Brown Rudnick and is made up entirely of BlockFi clients to whom the bankrupt lender owes money.

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

Other information now available regarding BlockFi includes the number of its customers and high-level details on their account sizes as well as transaction volume.

BlockFi had 662,427 users, nearly 73% of whom had account balances below $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. BlockFi earned just over $14 million in trading revenue during that time, according to the presentation, with an average of $21 in revenue per customer.

The company had $302.1 million in cash, along with portfolio assets valued at $366.7 million. In total, the crypto lender has unadjusted assets worth nearly $2.7 billion, nearly half of which are tied to FTX and Alameda, according to the presentation.

BlockFi’s failure was precipitated by exposure to Three Arrows Capital, a crypto hedge fund that filed for bankruptcy in July. FTX had organized a safety plan for BlockFi, through a $400 million revolving credit facility, but that deal fell apart when FTX faced its own liquidity crisis and quickly descended into bankruptcy.

According to the latest BlockFi financial data released, the value of the Alameda loan and FTX-related assets has 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 remaining 125 employees are being paid handsomely under the proposed retention plan designed to keep some people on board during the bankruptcy process, the filing says.

Successful employees will receive a total of $11.9 million on an annualized basis. Among the other staff are three Customer Success employees, who will each take home an annualized average of more than $134,000.

Five employees still with the company earn an average of $822,834, according to the presentation, showing that BlockFi’s retention plans “are more important than comparable crypto cases.”

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