When it rains it pours. And its showing upon the head of disgraced crypto-exchange failure, Sam Bankman-Fried. As shockwaves continue and other businesses collapse, one is taking action against SBF. BlockFi filed for bankruptcy today and the crypto-lender is suing the FTX founder over their demise.
Why did BlockFi Go Bankrupt?
According to the DeFi institution, their collapse lies on the shoulders of Bankman-Fried. The cryptocurrency lender was promised shares of Robinhood as collateral for a presumed loan SBF took out earlier in 2022.
The loan in default from BlockFi was for a credit line Bankman-Fried said would be used for his Emergent Fidelity Technologies (EFT) company, a vehicle for Alameda Research.
This was not the first loan however. Just last year, the lender’s CEO Zac Prince spoke on another deal with FTX publicly. He stated the DeFi loans company would safeguard users’ investments into Blockfi and the loan would have no effect on their money.
That statement has aged horribly.
He also noted the deal would unlock future collaborations & innovative business between the two. Apparently, it was not the right type of innovation.
How much did BlockFi loan out?
Blockworks reported the amount of the original collateral-backed credit line given to FTX was for $250-million (USD). This was given back in June 2021 for FTX.
Since then however, SBF has gone back for more. NYTimes reported earlier today that another line of credit for $400-Million was opened as well. The second being for Bankman-Fried’s Emergent Fidelity Technologies brand.
The two credit lines total a debt of $650 million dollars.
Either way with the recent collapse of FTX, the bankrupt crypto-exchange’s founder cannot pay it back. All of the companies owned by the former “world’s most giving billionaire,’ were dependent upon the public exchange.
Now, the situation is worse. Lenders that funded other ideas of the disgraced CEO are not getting the promised collateral. They cannot operate without the money expected to be returned.
What happened to the Robin Hood Shares of SBF?
If luck happens for BlockFi investors and clients, perhaps Sam Bankman-Fried will end up turning over the shares of Robin Hood. He’s said to be the owner of 7.6% of the stock trading an investment app.
Robin Hood’s total assets value was reported at $19.77-Billion in 2021, according to their Google knowledge panel. And that would put SBF’s shares of the company at a value of around $1.5-Billion.
This amount would fully cover the debt Sam Bankman-Fried’s FTX and Emergent Fidelity Technologies companies owe to BlockFi. Over an additional $700-million dollars would be left.
However, all money would be dissolved by the various companies owed by FTX and SBF, with more expected to come.