Crypto lenders out there have been severely struggling to deal with liquidity challenges. On Tuesday, July 12, crypto lender BlockFi introduced that it’ll not be accepting Grayscale’s GBTC shares as collateral.
Following the information, the GBTC inventory (OTCMKTS: GBTC) collapsed 5% on Tuesday ending at $12.21. Amid the Bitcoin value correction, the GBTC inventory has been on a freefall this 12 months. The share value of Grayscale Bitcoin Trust (GBTC) has corrected by practically 65% year-to-date.
The current determination from BlockFi highlights the fragility of the crypto lending business and its publicity to bancrupt firms. Grayscale had publicity to Three Arrows Capital, which was holding greater than 5% of GBTC inventory at one time limit.
Due to its dangerous debt with Three Arrows, BlockFi is already struggling losses to the tune of $80 million. BlockFi CEO Zac Prince spoke about their publicity in 3AC and added that they are going to be a part of the embattled hedge fund’s ongoing chapter case.
BlockFi Unwound Its GBTC Position
As per the newest data, BlockFi has already unwound all its GBTC place. On Tuesday, July 12, Zac Price replied to Meltem Demirors relating to the identical. Prince tweeted:
Hey Meltem 🙂 Just fyi – BlockFi instantly holds zero GBTC. The Bloomberg knowledge on that is outdated. We have a pair small loans (like sub $10M) w/ GBTC as collateral which can be within the technique of winding down.
Last month, BlockFi entered an settlement with FTX US to come back out of its liquidity woes. As per the agreement, FTX US would lengthen a $400 million revolving credit score facility together with the choice for the trade to accumulate BlockFi for an quantity of $240 million.
In comparability to different crypto lenders like Celsius Networks and Voyager Digital, BlockFi has been doing comparatively properly. Even in these distressed markets, BlockFi hasn’t stopped buyer withdrawals, not like its different friends.
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