BlockFi Inc. executives dismissed repeated warnings from its risk management team about not issuing substantial loans to Sam Bankman-Fried’s Alameda Research that were collateralized with digital tokens created by FTX, BlockFi creditors allege in a newly unsealed report, Bloomberg News reported. The report, prepared by a committee representing BlockFi unsecured creditors, blames the crypto lender’s failure on missteps made by Chief Executive Officer Zac Prince and other senior managers. The creditors’ findings were made public Friday, days after BlockFi released its own investigation contending Prince and other executives had little reason to worry about lending to Alameda before Bankman-Fried’s platform collapsed amid allegations of fraud. The committee said as early as August 2021, BlockFi had a copy of an Alameda balance sheet showing the trading firm relied substantially on FTT, a digital token created by FTX. Alameda’s over-reliance on FTT “set off alarms at BlockFi,” the committee said, but those concerns were dismissed by Prince. The report quotes Prince saying in an email that Alameda represented “the largest/clearest growth opportunity we have.” The FTT token played a major role in FTX’s failure. In early November, industry publication <em>Coindesk</em> reported on the same balance sheet BlockFi had, triggering a public run on FTX that forced Bankman-Fried’s platform into bankruptcy within days, according to the committee’s report. (Subscription required.)
