Crypto lending platform BlockFi held “loan exposure” totaling $600 million by the end of June, according to the company’s “Q2 2022 Transparency Report,” released on Friday.
The report showed BlockFi held an institutional and retail loan portfolio totaling $1.8 billion, with $1.2 billion in loan collateral. The firm defines its net “exposure” to a loan counterparty as “the fair value of loans to the counterparty minus the fair value of collateral posted by the counterparty.” This means that over half a billion dollars loaned out by BlockFi in Q2 wasn't covered by collateral.
Collateral refers to assets posted by borrowers to lenders as security against the borrower’s default. If the borrower cannot repay their debts, BlockFi may “liquidate” his collateral, assuming permanent ownership of the funds.
For example, BlockFi liquidated the now bankrupt crypto hedge fund Three Arrows Capital last month, with BlockFi CEO Zac Prince claiming at the time that no customer funds were impacted by the event.
"We require many, but not all, borrowers to post varying levels of collateral depending on the borrower's credit profile," explained the company in the report.
BlockFi reported that the fair value of stablecoins and digital assets stored in its clients’ wallet accounts was roughly half a million. Wallet accounts are non-interest-bearing custodial accounts from which BlockFi does not deploy assets for “revenue-generating activities,” the report said.
Bankrupt Three Arrows Capital Owes $3.5B to Creditors, Including $2.3B to Genesis
Three Arrows Capital (3AC) owes a whopping $3.5 billion to 27 different companies—including Blockchain.com, Voyager Digital, and lender Genesis Global Trading—according to court documents. The details come from affidavits describing details of the bankruptcy and liquidation of the crypto hedge fund. They were filed July 7 and made public Monday by Teneo, the firm hired to oversee 3AC’s liquidation. 3AC failed to repay loans and missed multiple margin calls with lenders, according to the filings,...
However, the firm owns another $2.6 billion in digital assets borrowed from customers through its BlockFi Interest Account (BIA) and BlockFi Personalized Yield (BPY) programs. These assets are used for BlockFi’s lending activities for its retail and institutional clients, and to facilitate trading on their behalf.
As of June 30, the platform’s total deployable assets—consisting of BIA, BPY, and customers’ loan collateral—totaled $3.9 billion. At BlockFi, loan collateral is also used for lending, investing, and rehypothecation (reusing collateral for BlockFi’s own funding), without the firm needing to retain “a like amount of digital assets.”
BlockFi, FTX Agree to New Credit Deal and Acquisition Terms
Cryptocurrency lending company BlockFi announced on Friday that it has reached an agreement with FTX US, the U.S. division of the crypto exchange led by billionaire Sam Bankman-Fried, for a revolving line of credit and potential acquisition. BlockFi CEO Zac Prince tweeted this afternoon that the deal represents a total value of $680 million. "An option to acquire BlockFi at a variable price of up to $240M based on performance triggers" is on the table, he said. The deal comes after rumors that F...
BlockFi accepted a $250 million revolving credit facility from FTX in June to keep itself afloat as the bear market set in. Prince has nevertheless attempted to distance himself and his company from other troubled firms such as Voyager Digital and competing crypto lender Celsius, both of which have filed for bankruptcy and frozen user withdrawals.
