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...
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