Stuart Alderoty, General Counsel for Ripple, stated in a tweet that BlockFi’s problem is another regulation by-enforcement success story of the SEC. The counsel asserted that the $100 million enforcement fine that the SEC charged BlockFi contributed to the firm’s bankruptcy.
Another SEC “regulation by enforcement” success story.
Months after $100M BlockFi/SEC deal BlockFi in b/cy. $275M loan outstanding to FTX from BlockFi. Unknown amounts owed to BlockFi from FTX. Nothing ever registered. Fines paid? With whose money? Consumers decimated. https://t.co/XWflfRDIMk
— Stuart Alderoty (@s_alderoty) November 28, 2022
He also raised questions about the $270 million loan outstanding and some unknown amounts owed to BlockFi by FTX. The lawyer further stated that there is no record of the loan unpaid, including the unknown amounts owed to BlockFi by FTX.
He raised questions about the fine in the SED/BlockFi deal and whose money was used for the payment. Alderoty claimed that it must be the customers’ money, which could be the reason for the firm’s insolvency. According to reports, Alderoty questioned the commission to show BlockFi’s ability to pay the settlement.
According to reports, the firm’s creditors are over $100,000, while its assets and liabilities range between $1 billion and $ billion. The largest creditor is Ankura, a trusted company that owes over $729 million. Ankura is also a trustee of BlockFi’s interest account.
As per BlockFi, the liquidity crunch is because of its exposure to FTX through loans to Alameda Research. The firm stated that it intends to lay off most of its 292 employees in a separate filing.