- They think FTX excuses are justifications
- And remembered all the failures of top managers
At yesterday’s court hearing, the Creditors’ Committee again took a hard line at BlockFi’s leadership. It’s possible read in published protocols.
Lenders believe BlockFi is shifting the blame to FTX and Alameda as a distraction. The real reason for the failures, they call the wrong decisions of top management and participants in the restructuring.
The Committee of Creditors has its own arguments for this. So, a few days after the collapse of FTX, when the crypto market was in a storm, BlockFi converted the cryptocurrency into fiat at an unfavorable rate. We are talking about assets worth about $ 240 million. Unfavorable exchange led to significant losses and potential tax difficulties for clients.
BlockFi’s errors don’t stop there. So, they managed to transfer the proceeds and an additional $10 million to the SVB bank, which soon went bankrupt. The Silicon Valley brand was not a strong custodial institution, but for some reason management failed to consider such risks. Later, federal authorities intervened and rescued all SVB depositors.
The Committee also accuses BlockFi of unreasonable spending. For example, they bought insurance for $22 million for their directors and top managers.
Yesterday, BlockFi announced that they would be dismantling the crypto lending platform in the coming months. This reduces the chances that the company will be able to find a buyer and save the business from bankruptcy.