By: Eliza Bennet
The recent trial against FTX co-founder, Sam Bankman-Fried, has opened up discussions on the intricate relationship between crypto platforms like BlockFi, FTX, and Alameda Research. BlockFi's bankruptcy exposed significant financial ties to both Alameda and FTX, suggesting a shared financial fate. This article aims to delve into the nuances of these relationships, evaluate potential lapses in due diligence, and explore the implications of these revelations on the broader crypto industry.
During BlockFi's crash in November 2022, it was revealed that the company had significant exposure to both Alameda and FTX, amounting to approximately $1 billion. This exposure hints at the fact that if Alameda's loans had continued to prosper, and if resources on FTX had remained stable, BlockFi might have averted bankruptcy. This highlights the interconnected nature of the crypto market and the perils of financial overdependence.
In light of these facts, it has been argued that BlockFi failed to conduct a thorough due diligence process while reviewing Alameda's collateral, mainly comprised of FTX-affiliated tokens. As the trial progresses, it is expected that more details about BlockFi's lending procedures and Bankman-Fried's potential involvement in alleged wrongdoings will emerge, serving as a noteworthy marker in understanding crypto industry dynamics.
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