Crypto lender Celsius’ recent suspension of withdrawals has rattled sentiment towards its peers, with majors such as Nexo and BlockFi now facing potential bank runs.
The situation has also been exacerbated by the possible insolvency of major hedge fund Three Arrows Capital, to which several lending platforms are heavily exposed.
This uncertainty has prompted several crypto lenders to clear the air over their exposure to the two entities, and the potential fallout from a liquidation.
BlockFi is the latest lender to reassure investors over its liquidity conditions. The firm also appears to have liquidated a loan held by Three Arrows.
BlockFi’s comments also come a few days after peer Nexo offered a similar reassurance. The firm also offered to purchase Celsius’ remaining assets.
Trending Stories
Crypto lender BlockFi reassures investors
Zac Prince, CEO of BlockFi, said in a Twitter thread that the firm has sufficient risk management mechanisms in place to mitigate risks from a potential bank run.
Prince also said that the firm had recently liquidated a loan when a “large client” failed to meet its obligations on an overcollateralized margin loan. Considering that Three Arrows’ woes stem largely from a drop in the value of its collateral, Prince could be referring to the hedge fund.
The Financial Times reported that BlockFi had indeed reduced its exposure to Three Arrows. The hedge fund was a “strategic” investor in the crypto lender.
No client funds are impacted. We believe we were one of the first to take action with this counterparty.
-Zac Prince, CEO of BlockFi
Prince added that the crypto lender is able to fulfill increased demand from investors, and intends to raise its interest rates to match a recent rate hike by the Federal Reserve.
But BlockFi’s difficulties lie elsewhere
Despite Prince’s reassurances, BlockFi is still feeling the brunt of the recent crypto downturn. The firm recently slashed 20% of its roles, following a sharp decline in crypto prices.
The firm was also fined $100 million by U.S. regulators for allegedly selling unregistered securities.
The crypto lender has also gotten into hot water for misleading investors over the collateralization of its loans- something that could come to fore amid the ongoing crash.
- Bitcoin Miners Likely Behind Crash Below $19K, Here’s Why
- India’s Crypto Exchanges In Trouble? 1% Tax Keeps Traders Away
- Crypto Exchange KuCoin Denies Rumours of Them Halting Exchange Withdrawals
- Elrond Price Jumps By 9% Over This Announcement
- XRP Holding Better Than Most Altcoins, Here’s Why
- Breaking: Polygon, Major Blockchains Hit With Network Attack
- New Crypto Rules In Europe: A Global Standard For Regulation?
- Third Biggest Whale Adds 1,416 Bitcoins In Last 2 Days; Will This Pump BTC?
- ‘Big Short’ Michael Burry Says Bitcoin Crash Is Only Halfway Through
- These Whales Scoop $850 mln Worth FTX Tokens Ahead Of BlockFi Deal
- CRV Price Analysis: Buyers Prepare To Boost CRV Prices To $1
- DOGE Price Analysis: Pullback Opportunity Eyes its Next Jump to $0.1
- Sandbox Price Analysis: Emerging Pattern May Soar SAND price by 20%
- Polygon Price Analysis: V-top Reversal may Direct MATIC to $0.31 Support
- ETH Price Analysis: Is Ethereum Dropping To Three Digits?
- Bitcoin Price Analysis- BTC on Losing Streak Nearing $17800; Will it Hold?
- NEAR Price Analysis: Falling Prices Eye $3 Breakdown; Should Coin Holders Worry?
- SHIB Price Analysis: Sustained Selling may Lead $SHIB to $0.0000074?
- Sandbox Price Analysis: Crashing SAND Prices Warns 25% Downfall
- Solana Price Analysis: $36 Breakdown Teases SOL Price to Revisit $26
