BlockFi Q2 2022 Transparency Report
According to the company’s ‘Q2 2022 Transparency Report,’ published on Friday, the crypto lending platform BlockFi had ‘loan exposure’ of $600 million by the end of June. According to the study, BlockFi had a $1.8 billion institutional and retail credit portfolio with $1.2 billion in loan collateral. The fair value of loans made to a loan counterparty less the fair value of the collateral provided by the counterparty is how the company calculates its net exposure to that counterparty. This indicates that more than $500,000,000 in loans made by BlockFi in Q2 were not secured by collateral.
Assets borrowers provide to lenders as security against their default are referred to as collateral. BlockFi has the right to liquidate the borrower’s collateral if they cannot pay their debts, taking possession of the money in the process. For instance, BlockFi liquidated the now-bankrupt cryptocurrency hedge fund Three Arrows Capital last month, despite the company’s CEO Zac Prince’s insistence that no customer assets were touched.
BlockFi Controlling Additional $2.6 Billion Digital Assets
According to the borrower’s credit profile, they ask many, but not all, borrowers to post varied sums of collateral. According to BlockFi, the fair worth of the stablecoins and digital assets kept in its customers’ wallet accounts was around 500,000. BlockFi does not deploy funds for revenue-generating operations from wallet accounts, which are non-interest-bearing custodial accounts, according to the research.
Through its BlockFi Interest Account (BIA) and BlockFi Personalized Yield (BPY) programmes, the company also controls an additional $2.6 billion in digital assets borrowed from users. To simplify trading on behalf of both institutional and retail clients, BlockFi uses these assets for its lending operations. The platform’s total deployable assets, which include BIA, BPY, and client loan collateral, were $3.9 billion as of June 30. Without the company owning a comparable quantity of digital assets, BlockFi uses loan collateral for lending, investing, and rehypothecation (using collateral for its funding).
Source: https://www.thecoinrepublic.com/2022/07/25/600-million-crypto-loan-vanished-from-blockfi-q2-collateral-report/