BlockFi Had $1.8B In Outstanding Loans From Investors In Q2

BlockFi had $1.8 billion in outstanding loans from investors in the second quarter of the year and also shared how it is managing liquidity and credit risks so let’s read more today in our latest cryptocurrency news.

BlockFi as a centralized crypto lender disclosed that by the end of the second quarter of the year, it had $1.8 billion in outstanding loans from retail and institutional investors with a $ 600 million net exposure. The disclosure came from the Transparency report of Q2 where the company outlined risks relating to the liqudity and credit and provided more details on the retail and institutional loan portfolios. Of the outstanding loans to the borrowers, the company reported that $600 million were in uncollateralized loans.

We've just published our Q2 Transparency Report with a breakdown of our total AUM, retail and institutional loans, and how we manage related liquidity and credit risk.
https://t.co/qcdRDcYmNQ

— BlockFi (@BlockFi) July 21, 2022

The institutional loans accounted for $1.5 billion from the outstanding loans while retail loans made up the rest of $300 million. The company based the holdings and outstanding loan amounts on the BTC price as a reference point. Blockfi had $1.8 billion in outstanding loans and said that it established guidelines to help it maintain the liquditiy necessary to meet the obligations under all core business activities which also included retail borrowing and institutional trading activities. These guidelines stipulated that it will hold 10% of the total amount because of clients upon demand for inventory that will be ready to be returned to clients.

It will hold 505 of the owed funds in places that can be retrieved and returned to clients in seven days and will hold 90% of the total amounts owed to the clients upon demand in inventory or in loans which can be called back in a year. The new liqudity guidelines came af ew weeks after Blockfi and FTX.US signed an agreement to send $400 million as a credit facility with an option to acquire the company for $240 million based on the performance triggers.

The deal came together after Three Arrows Capital defaulted on the loan from BlockFi. The July 20 post outlined the risk management and BLockfi explained that it only provides uncollateralized loans to the borrowers or Tier 1 clients. These clients are institutional clients which have a strong capital base audited by reputable third parties and a will to be transparent with the company.