#1◆ BlockFi In re BlockFi Inc., No. 22-19361 (MBK) United States Bankruptcy Court for the District of New Jersey Judge Michael B. Kaplan 1#2BlockFi Lee Sharpe, @LeeSharpeNFL A friend just sent me this ten-year-old prize structure for a Starcraft tournament, and I can't stop laughing. Prizes: 1st Place: $500 2nd Place: $250 3rd Place: $150 4th Place: $100 5th-8th Place: 25 BitCoins 2#39:41 T 0 BlockFi Meet BlockFi BlockFi is an industry-leading provider of cryptocurrency-related products and services, allowing its retail and institutional clients access to liquidity, yield, and credit. Block Fi has been backed by prominent venture capital and strategic investors since its inception. Following FTX's collapse and revelations of FTX's apparently fraudulent activity, BlockFi commenced these chapter 11 cases to stabilize its business and create the opportunity for a comprehensive restructuring transaction that maximizes value for clients. 3#4Roadmap I. II. III. IV. V. VI. Overview of Cryptocurrency Industry Key Introductions Business Overview Events Leading to Chapter 11 and BlockFi's Restructuring Efforts Path Forward Proposed Agenda for First Day Hearing BlockFi#5BlockFi Overview of Cryptocurrency Industry 5#6Snapshot - The Cryptocurrency Industry B Assets Medium of Exchange Infrastructure Benefits Future BTC BN Crypto Exchange Proof of Work Intermediate Settlement RITIES AND EXCH 15S DISS 4 ETH DeFi Protocols Proof of Stake Lower Fees Regulatory Scrutiny KⓇ Crypto Mining Assets Peer to Peer a Hot Wallet Global Access Debit/Credit Cards Crypto Loan CeFi Platforms Cold Wallet Identity Protection FATF Financial Action Task Force NFT NFT BlockFi NFT Marketplaces Web3 Fraud Prevention 9 Global Economic Interconnectedness 6#7Trading Volume ($ in MMs) Trading and Exchanges $4,000 $3,000 $2,000 $1,000 $- Jan-20 Apr-20 coinbase Jul-20 Jun Source: Bloomberg Crypto Market Stats 2021 Oct-20 Sep Jan-21 Coinbase Hits Record Low Shares of biggest US crypto exchange is down 80% this year Coinbase Global Inc Last Price Apr-21 19.2M + Bitcoin in circulation (¹), with trading volumes declining significantly from $3.2B in May to $143MM in November Market Decline Dec Jul-21 Oct-21 Mar Jan-22 Jun 2022 Sep Apr-22 (1) Data from Nomics.com as of November 22, 2022. Sources: Statista Digital Economy Compass 2022, Coin MarketCap, Bloomberg.com 450 -400 350 -300 250 200 150 -100 -50 Jul-22 Bloomberg Oct-22 # # FTX Binance Coinbase Kraken Active Crypto Exchanges BitFinex CoinLoan K Voyager KuCoin H BitM EX Crypto.com Inactive Crypto Exchanges Nexo V C 4 Celsius Zipmex bybit ByBit Huobi OKX Thodex BlockFi 7#8Major Types of Cryptocurrency and Tokens Payment Coins Utility Tokens Coins that are used as an alternative means of payment and exchange, designed to decentralize buying and selling goods Tokens that run on top of a crypto platform, designed to provide access to and fund transactions and costs to that specific platform B B Bitcoin Ethereum A Aave Bitcoin Cash Maker Ł Litecoin Governance Tokens Tokens that allow holders to vote on the direction of a blockchain project, designed to decentralize decision-making Compound PancakeSwap כ (1) Binance USD is a Paxos product through White Label with Paxos Dash M Monero 2 Decred Uniswap Aurora Chainlink Binance USDO $ Basic Attention Pax Dollar Ox Stablecoins Coins whose value is pegged, or tied, to that of another currency or commodity, designed to provide an alternative to volatile crypto Đ Dai Binance Coin Tether NI Zilliqa F Gemini Dollar ($ BlockFi USD Coin 8#9BlockFi © Key Introductions 9#10Leadership Team 9 Zac Prince Chief Executive Officer & Founder Experience at multiple startups with three successful exits: Google, Kabbage and DunnHumby. Early employee and head of sales at Orchard Platform. Head of sales, marketing, and client service within a consumer lending business at Zibby. Nationally ranked youth tennis player and continues to play racket sports today. Flori Marquez Chief Operating Officer & Founder Portfolio Manager and Operations Lead at Bond Street, a secured small business lender (acquired by Goldman Sachs). Analyst at Oak Hill Advisors, a 30B fixed income asset manager. Proud owner of a corgi. BlockFi 10#11Debtors' Advisors KIRKLAND & ELLIS HAYNES BOONE Cole Schotz P.C. Proposed Co-Counsel to the Debtors III WALKERS Proposed Bermuda Counsel BRG Proposed Financial Advisor to the Debtors KROLL Proposed Notice & Claims Agent MOELIS & COMPANY Proposed Investment Banker to the Debtors C STREET ADVISORY GROUP ‒‒‒‒ BlockFi Proposed Strategic and Communications Advisor 11#12BlockFi Business Overview 12#13BlockFi About BlockFi BlockFi Inc. (together with its direct and indirect subsidiaries, "BlockFi") provides multiple product offerings to enable its clients, which include both institutional and retail clients, to access liquidity, yield, and credit. BlockFi's vision is to bridge the worlds of traditional finance and blockchain technology to bring financial empowerment to clients on a global scale. 3.38 $554.57 (0) Interest Account own be $158.402.19 $214,209.57 D tot Pa **** $7.147.26 13#14BlockFi's Four Pillars Founded in 2017 by Zac Prince and Flori Marquez to provide credit services to markets with limited access to simple financial products. BlockFi is defined by the four values that embody its culture: Pragmatic Pioneering Inventive, aspiring for impactful and tangible goals; define and refine new technologies Clients Not Customers BlockFi views its customers and partners as valued clients that deserve world-class support and service W Individual Efforts, Collective Success Teamwork, thoughtfulness, humility, and grit BlockFi 000 Transparency Builds Trust BlockFi communicates transparently; BlockFi intentionally avoids over-the- top language and claims 14#15$25,000.00 Ⓒ ⒸAXGd rồi 180 k Client-Centric Approach BlockFi's business model is client centric, consistent with its core value of "clients not customers" and its commitment to prioritizing clients' best interests. Generally, BlockFi's clients are separated into two types: retail and institutional. Retail 270091007 8000 Wallet BlockFi clients can open a non- interest bearing BlockFi Wallet account to store digital assets supported by BlockFi. $100 Or Trading Enables clients to buy, sell, and exchange digital assets supported by BlockFi. Retail Client Loans Enables clients to borrow USD or stablecoins (USDC, GUSD or PAX) from BlockFi secured by certain types of digital asset collateral (e.g., BTC, ETH, LTC, or PAXG). Interest Account Interest bearing accounts that allow clients to earn interest on BlockFi supported digital assets they transfer to their accounts. Private Client BlockFi provides an individually negotiated interest- bearing borrowing product to eligible clients as part of its BlockFi Private Client suite of products. BlockFi FUUF VISA Rewards Program BlockFi Credit Card Rewards Program allows certain eligible US clients to earn Points, which are redeemed for cryptocurrency rewards. BlackFi BlockFi Institutional BlockFi Prime Full suite of Prime Products enables clients to access, trade and borrow digital assets, all in one place. Institutional Client Loans Solutions for miners, exchanges, and trading firms. Enables clients to borrow cash or crypto. 15#16BlockFi's Approach to Risk Management BlockFi maintains a robust risk management structure-BlockFi's risk management procedures are transparent and posted on BlockFi's website. The Audit and Risk Committee is directly responsible for, among other things: overseeing the audit of BlockFi's consolidated financial statements by an independent registered accounting firm; BlockFi considering the adequacy and effectiveness of internal controls; reviewing and overseeing BlockFi's policies related to its enterprise risk management framework, setting the risk appetite for the company, and monitoring the company's risk profile, risk exposure and compliance risks; and reviewing related party transactions. 16#17Industry-Leading Compliance Never Launched Its Own Token to Fundraise Unlike certain competitors, BlockFi never launched its own token to raise funds but instead relied on traditional venture capital financing. Industry Leader in Transparency BlockFi posts a quarterly transparency report to update its clients about the assets on BlockFi's platform and how it manages related liquidity and credit risk. 47 BlockFi 47 Licenses Issued by 32 States First company in many states to seek and receive lending licenses and money transmission licenses for making cryptocurrency-backed loans; BlockFi has been issued 47 licenses for lending and money transmission and the like by 32 states and the District of Columbia, and a separate Class F Digital Business Assets License from Bermuda. Settlement with SEC In 2021, several U.S. state regulators as well as the SEC sent inquiries related to BlockFi's BIAs focused on whether interest- bearing accounts were, in fact, securities requiring registration with the SEC. BlockFi resolved these disputes with these regulators via settlement and, as part of that agreement, agreed to cease selling the then-existing interest-bearing accounts to customers in the United States. As a result of that settlement, BlockFi created a new product, "BlockFi Yield," and prepared an S-1 for BlockFi Yield to be registered with the SEC. BlockFi is the only cryptocurrency platform to have reached such a settlement with the SEC. 17#18BlockFi's Global Presence The Debtors' 370 employees and independent contractors are located in: The United States Bermuda Singapore Argentina Brazil Greece Hong Kong India Ireland Mexico Netherlands Poland Portugal Singapore United Kingdom O. BlockFi 18#19BlockFi BlockFi Lending LLC BlockFi Cayman LLC BlockFi Trading LLC BlockFi Lending II LLC BlockFi Holding UK Limited BlockFi UK Limited Chapter 11 Debtors BlockFi Wallet LLC BlockFi Inc. BlockFi Asia PTE. Ltd. BlockFi Ventures LLC BlockFi International Ltd. BlockFi Inc. owns 50% of BV Power Alpha LLC; joint venture party, VCV Digital Infrastructure Alpha LLC, owns the other 50% of BV Power Alpha LLC BlockFi Investment Products LLC BlockFi, Services Inc. 50 % Debtors VCV Digital Infrastructure Alpha LLC 50% BV Power Alpha LLC 19#20BlockFi BlockFi Lending LLC BlockFi Cayman LLC BlockFi Trading LLC BlockFi Lending II LLC Intercompany Transactions BlockFi Holding K Limited BlockFi UK Limited BlockFi Wallet LLC BlockFi Asia PTE. Ltd. BlockFi Inc. BlockFi Ventures LLC BlockFi International Ltd. BlockFi Investment Products LLC BlockFi, Services Inc. 50 % VCV Digital Infrastructure Alpha LLC BV Power Alpha LLC Intercompany Transactions 50 % 20#21BlockFi BlockFi Lending LLC BlockFi Cayman LLC BlockFi Trading LLC BlockFi Lending II LLC Intercompany Transactions BlockFi Holdin-U Limited BlockFi UK Limited BlockFi Wallet LLC BlockFi Asia PTE. Ltd. BlockFi Inc. BlockFi Ventures LLC BlockFi International Ltd. BlockFi Investment Products LLC BlockFi, Services Inc. □ 50 % VCV Digital Infrastructure Alpha LLC BV Power Alpha LLC Intercompany Transactions 50 % 21#22BlockFi Harvey Tepner BlockFi Lending LLC BlockFi Cayman LLC BlockFi Trading LLC BlockFi Lending II LLC Bolstered Corporate Governance Scott Vogel Jennifer Hill¹ Alan Carr BlockFi Holding UK Limited BlockFi UK Limited BlockFi Wallet LLC BlockFi Asia PTE. Ltd. BlockFi Inc. BlockFi Ventures LLC BlockFi International Ltd. Pam Corrie Jill Frizzley BlockFi Investment Products LLC (1) Ms. Hill has been a member of the BlockFi Inc. Board since 2021. She was appointed to the Special Committee of the BlockFi. Inc. Board along with Mr. Vogel. Given her prior connection with BlockFi, however, Ms. Hill will recuse herself from any investigation the Special Committee performs related to the June 2022 transactions between BlockFi and FTX and any other work that presents an actual or potential conflict. BlockFi, Services Inc. □ 50 % VCV Digital Infrastructure Alpha LLC BV Power Alpha LLC Independent Director and Manager Appointments 50 % 22#23Capital Structure Funded Debt $400 million unsecured revolver, junior to client obligations Lender Borrower Guarantors Interest Rate Maturity Approx. Principal Amount Outstanding (USDC) Vest Realm Shires Inc. (d/b/a FTX US) BlockFi Inc. BlockFi Trading LLC BlockFi Lending LLC 5% June 30, 2027 (¹) $275 million Common Preferred Equity Interests Туре Common Stock Special Voting Stock(2) Type Series Seed Preferred Series Seed-2 Preferred Series A-1 Preferred Series A-2 Preferred Series A-3 Preferred Series B Preferred Series C Preferred Series D Preferred Series E Preferred Series E-1 Preferred (1) Schedule 1 to the Loan Agreement provides that the "Maturity Date" means the "Fifth anniversary of the Effective Date [of the Loan Agreement] or any date on which the Lender accelerates the Obligations or the Obligations are accelerated pursuant to the terms of [the Loan Agreement]" (2) The Special Voting Stock is held by FTX in connection with the FTX Option Agreement.. BlockFi Total Shares Outstanding 6,505,972 Total Shares Outstanding 2,833,977 1,167,941 3,109,745 127,210 7,753,114 9,837,208 7,642,144 9,739,310 2,442,193 660,116 23#24BlockFi Key Events in BlockFi's History Jan 2018: BlockFi starts lending Feb 2018: BlockFi seed round of funding 2018 July 2018: BlockFi $50M in funding from Galaxy Jan-Feb 2020: Series B Preferred Stock July-Aug 2019: Series A Preferred Stock 2019 Aug-Sept 2020: Series C Preferred Stock at $450M valuation Mar-May 2021: Series D Preferred Stock at $3B valuation July-Aug 2021: Series E Preferred Stock at $3.8B valuation 2020 2021 Nov 11, 2022: FTX bankruptcy filing Nov 10, 2022: BlockFi limits customer withdrawals Nov 2, 2022: FTX/Alameda financial data leaked October 27, 2022: Core Scientific announces default July 13, 2022: Celsius files chapter 11 July 5, 2022: Voyager freezes platform /files chapter 11 July 1, 2022: BlockFi/FTX "rescue" transaction June 14, 2022: 3AC collapse June 12, 2022: Celsius freezes platform ~May 10, 2022: Luna collapses Feb 14, 2022: SEC Settlement 2022 24#25BlockFi Events Leading to Chapter 11 25#26BlockFi Act One: Overall Industry Pullback 26#27BlockFi Summer 2022 27#28BlockFi ~ Many cryptocurrencies experienced significant decline through 2022. Bitcoin, for example, has slumped approximately 67% year-to-date. Under Pressure Bitcoin closer to fresh lows for year but RSI gauge now at oversold level -50000 RS (14) Clase (REUSDEGN) 27.873 Saurce: Blamber Mary Jun Jul Aug 45000 -40000 35000 30000 25000 20000 15000 100 +50 -0 US Dollars Bloomberg 28#29BlockFi May 7, 2022 Luna Collapses Overnight In one week, Luna's price fell from $82.55 to $0.000001 per token, eliminating $18 billion of value in the cryptocurrency sector. Luna's Swoon Digital coin Luna has lost almost all of its value Terra Last Price Jan Source: Bloomberg HTY Feb Metampy Mar 2022 Apr -120 100 -80 -60 -40 20 0.0001 May Bloomberg#30BlockFi June 15, 2022 Three Arrows Capital, reportedly due in part to the collapse of Luna, ordered by court in British Virgin Islands to commence liquidation proceedings 30#31July 2022 Key industry players, Celsius and Voyager, each file for chapter 11 within 10 days of one another C C Celsius VOYAGER 31#32Impact on BlockFi 3AC was one of BlockFi's largest borrower clients, and its collapse led to material losses for BlockFi, which were mitigated by BlockFi's credit policies. The collapse of UST, along with the halting of withdrawals and bankruptcies of Celsius, Voyager, and 3AC led to significant withdrawals from BlockFi. 125 KS 45 Jan 2012 Lendable Assets 2/15 SEC settlement Mar 2022 5/10 Terra/LUNA de-peg May 2012 6/12 Celsius pauses withdrawals 7/1 BlockFi signs FTX Loan and Option Agmt Jull 2022 Sep 2022 11/8 FTX liquidity crunch reported Now 2021 11/10 FTX files for bankruptcy 32#33While BlockFi was able to withstand the loss from 3AC and process all customer withdrawals within the normal periods set forth in its customer agreements, it prudently sought additional liquidity to protect its client accounts into the indefinite future. Enter: FTX 33#34The FTX Rescue Transaction The Deal FTX offers to essentially backstop BlockFi's client withdrawals. 1. FTX US committed to loan up to $400 million notional amount of cryptocurrencies to BlockFi on a junior basis to BlockFi's obligations to its clients. 2. FTX US received an option to acquire BlockFi, which FTX would have been permitted to exercise as early as July 2023. The FTX transaction was widely supported by BlockFi's shareholders, who voted 89% in favor of the transaction. Blog Post By Dove Michaels February FINANCE FTX Extends $25 BlockFi said the crypto e its balance sheet. By Paul Vigna June 21 BlockFi Signs Landmark Term Sheet with FTX DEALS FTX Strikes I Million The accord with bi for BlockFi as crys Read Now Appeared in the 2 FINANCE Crypto E Sam Bankm million cred Appened i BlockFi BlockFi Signs a Landmark Term Sheet with FTX to Provide a $250 Million Credit Facility JUNE 21, 2022 Blos NANCIAL TIMES RK & CAREERS LIFE & ARTS HTSI ails out lending ecutive Sam Bankman-Fried and a crypto he option to Deadly Conspiracy NEXT SS400 34 ww Les#35E Alameda Loans M WRS SILO Cryptomeny ITKUS Unang FTX FTX Gaming FTX NFTS Tatives FTX Capital Markets Embed Clearing HA ALAMEDA SILO Independent Director: Matt Rosenberg • Treasuries • Crypto ETFs Sam Bankman-Fried Cash and Cash Equivalents Cryptocurrency Other Digital Assets Venture Investments Genesis Digital Assets Modulo Capital ▸ Pionic (Toss) > Others Indicative Assets by Silo Anthropic Dave In ES SILO Capital In BlockFi as Lender to Alameda DOTCOM SILO D. Julija. Znak Farmer and Mad Cutters Cash and Cash quivalents MTX.m -Real Estate Licensed Subsidiaries in Non-U As part of BlockFi's credit evaluation process, BlockFi received unaudited quarterly financial statements and certain verifiable financial information, such as cryptocurrency wallet addresses, and had regular dialogue with Alameda staff, who made ongoing representations regarding its financial standing, significant equity capital, and unencumbered assets on Alameda's balance sheet. BlockFi (1) Declaration of John J. Ray III in Support of Chapter 11 Petitions and First Day Pleadings In re FTX Trading LTD., No. 22-11068 (JTD) [Docket No. 24] (Bankr. D. Del. Nov. 17, 2022) 35#36BlockFi Act Two: The Collapse of FTX and the Debtors' Response 36#37FTX & Binance On November 2, 2022, Coin Desk released a report revealing that on Alameda's balance sheet, $5.8 billion of its $14.6 billion in assets was FTT, FTX's self-minted token.) The report initiated a death spiral for FTT during the first 11 days of November. Thread CZ Binance @cz_binance As part of Binance's exit from FTX equity last year, Binance received roughly $2.1 billion USD equivalent in cash (BUSD and FTT). Due to recent revelations that have came to light, we have decided to liquidate any remaining FTT on our books. 1/4 9:47 AM Nov 6, 2022 Twitter for iPhone 25.0 22.4 20.0 17.5 15.0 12.5 10.0 7.5 5.0 2.5 0 USD 21 24 27 Nov 13 16 Crypto World Is Rocked as World's Largest Exchange Rescues Rival The New York Times - November 8, 2022 19 Binance @binance Nov 9 Official As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com. 5,932 1 25.2K (1) Ian Allison, Divisions in Sam Bankman-Fried's Crypto Empire Blur on His Trading Titan Alameda's Balance Sheet, CoinDesk (Nov. 2, 2022). 64.1K 320 Binance @binance Nov 9 Official In the beginning, our hope was to be able to support FTX's customers to provide liquidity, but the issues are beyond our control or ability to help. 1 1,249 1 BlockFi ↑ 8,643 37#38FTX Files Chapter 11 Tweet FTX FFTX @FTX_Official Ⓒ Official Press Release FTX Group Companies Commence Volunta Begin Orderly Process to Review and Mon John J. Ray III Appointed Chief Execu FTX Trading Ltd. (d.b.a. FTX.com), an Services Inc. (d.b.a. FTX US), Alameda Resea affiliated companies (together, the "FTX Grou under Chapter 11 of the United States Bankrup begin an orderly process to review and monetiz John J. Ray III has been appointed Chi Bankman-Fried has resigned his role as Chief orderly transition. Many employees of the FT continue with the FTX Group and assist Mr. R during the Chapter 11 proceedings. "The immediate relief of Chapter 11 is opportunity to assess its situation and develop a stakeholders," said Mr. Ray. "The FTX Group administered in an organized, joint process. I contract party, stockholder, investor, governme going to conduct this effort with diligence, tho understand that events have been fast-moving Stakeholders should review the materials filed days for more information." Excluded Subsidiaries Thread 8:14 AM Nov 11, 2022 Twitter Web App SBF @SBF_FTX 1) Hi all: The following subsidiaries are not included in the Chapter 11 proceedings: LedgerX LLC, FTX Digital Markets Ltd., FTX Australia Pty Ltd. and FTX Express Pay Ltd.. *** Today, I filed FTX, FTX US, and Alameda for voluntary Chapter 11 proceedings in the US. 9:23 AM Nov 11, 2022. Twitter Web App FTX Files for Bankruptcy; CEO Bankman-Fried Resigns The Wall Street Journal - November 11, 2022 FTX says it could have over 1 million creditors in new bankruptcy filing CNBC-November 15, 2022 FTX had "substantial amount" of assets stolen, diminishing odds users will get their money back CBS News - November 23, 2022 38 Fi#39FTX Files Chapter 11 Case 22-11068-JTD Doc 24 Filed 11/17/22 Page 1 of 30 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE Chapter 1 Case No. 22-11068 (FTD) (Joint Administration Base: FTX TRADING LTD, eta,¹ Debtors DECLARATION OF JOHN J. RAY IN SUP CHAPTER 1 PETITIONS AND FIRST DAY F 1,Joh 3. Ray, hereby declare under penalty of S. I am the Chief Executive Officer of the debrors-in-possession collectively, the "Debtors"), having a moming hours of November 11, 2022. Ia administering from wary offices in the United Suncs. 2. My Best official act in these so the Debtors and the commencement of the above y Since my appointment 3. professionals at Alvarez & Marsal, Sulliva à confidential cybersecurity firm, 10 secy reliable books and records, to assemb respond to numerous inquiries from The last for its of FTX Toy Actories in these Chapsy identification numbers in website of the chess p 424437-65 3808842 (c) U.S. Commodity Futures Trading Commissions CFIC, the LLS Antarney's Office for the Souther District of New York, the U.S. Securities and Exchange Commission (SEC), and the US Congress, among others (6) 4. I have over 40 years of legal and restructuring experience. I have been the Chid Restructuring Office or Chief Executive Officer in several of the largest corporate failures in history. Thave supervised situations involving allegations of criminal activity and mascEnron). I have supervised situations involving noved financial structures (Eston and Residential Capical) and cross-border asset recovery and maxination (Nortel and Overseas Shipholding). Nearly every situation in which I have been involved has been characterized by defects of some sort in internal controls, regulatory compliance, buman resources and systems Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here. From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation Case 22-11068-JTD Doc 24 Filed 11/17/22 6. jaj 5 Page 2 of 30 unprecedented. These Chapter 11 Cates have five core objectives: Implementation of Controls: the implementation of accounting, audit, ass management, cybersecurity, buman resources, risk management, das protection and other systems that did not exist, or did not exist to an appropriate degree, prior to my appointment, Asset Protection & Revery: the location and security of property of the estate, autantial portion of which may be missing or stolen Transparency and Investigation: the pending comprehensive, Bransparent and deliberate investigation into claims against Mr. Samuel Bank Fried, the other co-founders of the Debtors and third parties, in W BlockFi 39#403: FTX Files Chapter 11 Case 22-11068-JTD Doc 24 Filed 11/17/22 Page 1 of 30 FTX TRA IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE Chapter 11 Case No. 22-11068 EFTE U.S. Commodity Futures Trading Commissions CFTC Southern District of New Yo Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here. From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented. parent and deliberate investigation into clint Mr. Samuel and Investigation: the pending comprehensive, Bankman Fried, the other co-founder of the Debtors and third parties, in The last for digits of DTX Toy Actories in these Chapi to identification numbers in website of the Debtors pre 5. Case 22-11088-JTD Doc 24 Filed 11/17/22 3808484 W -1- mesing or s BlockFi Page 2 of 30 40#41The Debtors' Response BlockFi took several proactive measures to attempt to limit its exposure to FTX and Alameda through a combination of margin calls and recalls of open-term loans. In addition, in early November 2022, BlockFi made an additional borrowing request from FTX, which was denied. Alameda thereafter defaulted on approximately $680 million of loan obligations to BlockFi. We are in the heartbreaking position of sharing the following news with you: BlockFi November 11, 2022 BlockFi Update 1 We are shocked and dismayed by the news regarding FTX and Alameda. We, like the rest of the world, found out about this situation through Twitter. Given the lack of clarity on the status of FTX.com, FTX US and Alameda, we are not able to operate business as usual. 2 Our priority has been and will continue to be to protect our clients and their interests. W 3 Until there is further clarity, we are limiting platform activity, including pausing client withdrawals as allowed under our Terms. We will share more specifics as soon as possible. We request that clients not deposit to BlockFi Wallet or Interest Accounts at this time. 4 We intend to communicate as frequently as possible going forward but anticipate that this will be less frequent than what our clients and other stakeholders are used to. BlockFi 41#42BlockFi Path Forward 42#43BlockFi The Plan The Debtors have filed a chapter 11 plan that, if confirmed, would allow the Debtors to emerge on a standalone basis. BlockFi will simultaneously explore third party transactions as part of a sale process. The Debtors will fight to maximize client recoveries. In re: BLOCKFI INC., et al., UNITED STATES BANKRUPTCY COURT DISTRICT OF NEW JERSEY Debtors: 1 JOINT PLAN OF REORGANIZATION OF BLOCKFI INC. AND ITS DEBTOR AFFILIATES PURSUANT TO CHAPTER 11 OF THE BANKRUPTCY CODE NOTHING CONTAINED HEREIN SHALL CONSTITUTE AN OFFER, ACCEPTANCE, COMMITMENT, OR LEGALLY BINDING OBLIGATION OF THE DEBTORS OR ANY OTHER PARTY IN INTEREST, AND THIS PLAN IS SUBJECT TO APPROVAL BY THE BANKRUPTCY COURT AND OTHER CUSTOMARY CONDITIONS. THIS PLAN IS NOT AN OFFER WITH RESPECT TO ANY SECURITIES. COLE SCHOTZ P.C. Michael D. Sirota, Esq. (NJ Bar No. 014321986) Warren A. Usatine, Esq. (NJ Bar No. 025881995) Court Plaza North, 25 Main Street Hackensack, New Jersey 07601 (201) 489-3000 [email protected] [email protected] Chapter 11 Case No. 22- (Joint Administration Requested) KIRKLAND & ELLIS LLP KIRKLAND & ELLIS INTERNATIONAL LLP Joshua A. Sussberg, P.C. (pro hac vice pending) Christine A. Okike, P.C. (pro hac vice pending) 601 Lexington Avenue New York, New York 10022 (212) 446-4800 [email protected] [email protected] Proposed Attorneys for Debtors and Debtors in Possession HAYNES AND BOONE, LLP Richard S. Kanowitz, Esq. (NJ Bar No. 047911992) Kenric D. Kattner, Esq. (pro hac vice pending) 30 Rockefeller Plaza, 26th Floor New York, New York 10112 (212) 659-7300 richard.kanowitz@haynes boone.com kenric [email protected] Proposed Attorneys for Debtors and Debtors in Possession 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor's federal tax identification number, are: BlockFi Inc. (0015); BlockFi Trading LLC (2487); BlockFi Lending LLC (5017); BlockFi Wallet LLC (3231); BlockFi Ventures LLC (9937); BlockFi International Ltd. (N/A); BlockFi Investment Products LLC (2422); BlockFi Services, Inc. (5965) and BlockFi Lending II LLC (0154). The location of the Debtors' service address is 201 Montgomery Street, Suite 263, Jersey City, NJ 07302. BlockFi 43#44BlockFi Creditor Inquiries [email protected] 44#45Pleading Proposed Agenda Joint Administration Motion Cash Management Motion Wages Motion Equity Trading Procedures Motion Kroll Retention Application Case Management Procedures Motion Consolidation of Creditors Motion Schedules Extension Motion Utilities Motion Motion to Enforce the Automatic Stay Taxes Motion nsurance Motion Critical Vendor Motion Docket No. 2 7 16 14 15 3 4 5 10 12 9 11 13 BlockFi 45