FTX Loan Wiped Out $800M in BlockFi Executives’ Equity, Court Filing Reveals

Executives from bankrupt crypto lender BlockFi granted themselves pay rises of as much as $275,000 each, after they saw $800 million in their equity holdings wiped out because of a loan from collapsed crypto exchange FTX, a court filing shows.

A statement of financial affairs for BlockFi, which was filed Thursday in the U.S. Bankruptcy Court for the District of New Jersey, contains thousands of pages of transactions that took place in the run-up to BlockFi's collapse. The firm had gross revenue of over $4 million for 2022 until its bankruptcy filing in November.

Last June, FTX offered BlockFi a $400 million loan, and Thursday's filing details the impact of the loan on 13 of BlockFi’s top executives.

“The massive impact of the FTX transaction on management equity led BlockFi’s board of directors to, among other things, increase base salaries and make retention payments for those that remained in the interest of retaining business critical knowledge and capabilities,” the filing stated.

Founder and CEO Zac Prince, for example, saw $413 million in equity value eliminated, and was compensated by a salary increase from $250,000 to $400,000, while Chief Operating Officer Flori Marquez saw a raise from $225,000 to $500,000, the filing said.

BlockFi lawyers have been at pains to stress that – unlike other crypto bankruptcy cases such as the one for lender Celsius Network – there were no last-minute panicky withdrawals by BlockFi senior executives before its collapse.

No member of the BlockFi management team withdrew any cryptocurrency from the platform after Oct. 14, the filing said, and the management team represented just 0.15% of the $7.7 billion in retail withdrawals over the year.

But the filings nonetheless reveal significant withdrawals made by senior management – including over $9 million taken out of the platform by Prince in April, which the filing said was to pay U.S. federal and state taxes, and his withdrawal of just over $870,000 in August.

Most transaction data is anonymized, with the court due to consider next week whether to unseal creditor information. In a parallel hearing Wednesday, a Delaware judge agreed FTX customer names can remain secret for three months.

Read more: BlockFi Management Hasn't Withdrawn Any Crypto Since October, Lawyer Tells Court

CORRECTION (Jan. 12, 16:50 UTC): corrects figures for salary raises.