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Creditors Claim BlockFi Remained Invested in FTX and Alameda Despite Balance Sheet Concerns

BlockFi, a popular cryptocurrency lending platform, has come under scrutiny for its lack of due diligence in its dealings with Alameda Research and FTX, two entities belonging to billionaire Sam Bankman-Fried’s empire. An investigation revealed that BlockFi had provided special treatment to FTT and Alameda, disregarding risk management principles.

The findings of the investigation were based on a comprehensive review of 30,000 internal documents, as well as interviews and depositions with key individuals, including BlockFi’s founder and CEO, Zac Prince. The report concluded that the company had failed to fulfill basic due diligence requirements when it came to Bankman-Fried’s empire.

According to the report, BlockFi’s special treatment for FTT and Alameda demonstrated a reckless disregard for risk management principles. The company seemingly cast aside its obligation to safeguard its customers’ funds by granting favorable treatment to these entities without properly assessing the associated risks. This lack of diligence puts into question BlockFi’s commitment to protecting its users’ investments.

BlockFi has gained popularity as a lending platform that allows users to lend out their cryptocurrencies and earn interest. However, this investigation raises concerns about the company’s practices and whether it is truly acting in the best interest of its customers. By failing to conduct proper due diligence, BlockFi has potentially exposed its users to unnecessary risks.

The report’s findings also shed light on the close relationship between BlockFi and Bankman-Fried’s empire. This raises questions about potential conflicts of interest and whether BlockFi’s actions were influenced by its relationship with these entities. Transparency and accountability are crucial in the cryptocurrency industry, and any lapses in due diligence could erode trust in the sector as a whole.

It is imperative for companies like BlockFi to prioritize risk management and due diligence to ensure the safety and security of their users’ funds. By failing to do so, the company has not only jeopardized its own reputation but also undermined the trust that users place in such platforms.

In conclusion, BlockFi’s failure to complete basic due diligence on Bankman-Fried’s empire, as revealed by the investigation, is a cause for concern. The special treatment given to FTT and Alameda without proper risk assessment raises questions about the company’s commitment to protecting its users’ investments. Transparency, accountability, and rigorous risk management practices are essential for companies operating in the cryptocurrency industry to establish and maintain trust.

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