Financials from bankrupt crypto lender BlockFi, which had previously been censored but were accidentally posted without the redactions on Tuesday (January 24, 2023), showed that it had over $1.2 billion in assets linked up with Sam Bankman-FTX Fried’s and Alameda Research.
BlockFi’s exposure to FTX was greater than prior disclosures suggested. After FTX, which had committed to help the struggling lender before its own collapse, failed in late November, the company filed for Chapter 11 bankruptcy protection.
The balance shown in the unredacted BlockFi filing includes $415.9 million worth of assets linked to FTX and $831.3 million in loans to Alameda. Those figures are as of Jan. 14. Both of Bankman-Fried’s firms were wrapped into FTX’s November bankruptcy, which sent the crypto markets reeling.
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. Bitcoin and ether have since rallied, lifting the value of those holdings.
M3 Partners, an advisor to the creditor committee, assembled the financial presentation. The firm is represented by law firm Brown Rudnick and is entirely composed of BlockFi clients who are owed money by the bankrupt lender.
The unredacted filing was submitted accidentally, a lawyer for the creditor committee told CNBC, but he declined to make any further comments. Attorneys for BlockFi did not respond to a request for comment.
A BlockFi representative said in a statement after publication of the story that the company has “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,” the representative wrote.
Other information that’s now available regarding BlockFi includes its customer numbers and high-level detail on the size of their accounts as well as trading volume.
BlockFi had 662,427 users, of which close to 73%, had account balances under $1,000. In the six months from May to November of last year, those clients had a cumulative trading volume of $67.7 million, while total volume was $1.17 billion. BlockFi made just over $14 million in trading revenue over that period, according to the presentation, averaging $21 in revenue per customer.
The company had $302.1 million in cash, alongside wallet assets valued at $366.7 million. In all, the crypto lender has unadjusted assets worth almost $2.7 billion, with close to half tied to FTX and Alameda, the presentation shows.
BlockFi’s failure was precipitated by exposure to Three Arrows Capital, a crypto hedge fund that filed for bankruptcy protection in July. FTX had arranged a rescue plan for BlockFi, through a $400 million revolving credit facility, but that deal fell apart when FTX faced its own liquidity crisis and rapidly sank into bankruptcy.
According to the latest released BlockFi financials, the value of both the Alameda loan receivable and the assets connected to FTX have been adjusted to $0. After all adjustments, BlockFi has just shy of $1.3 billion in assets, only $668.8 million of which is described as “Liquid / To Be Distributed.”
BlockFi’s 125 remaining employees are being paid handsomely as part of the proposed retention plan designed to keep some people on board during the bankruptcy process, the filing shows.
The combined compensation for the retained employees will total $11.9 million annually. Three employees who work in client success are among the remaining team members, and they will each receive an annualized average salary of more than $134,000.
Five employees still with the company make an average of $822,834, according to the presentation, which shows that BlockFi’s retention “plans are larger than comparable crypto cases.”
