New York-based startup has become the latest member to provide crypto-back loans. Like , , , , and , BlockFi offers options to lend and borrow fiat currency with cryptocurrencies as .
Collateralization of cryptocurrency assets allows borrowers to hold onto their cryptocurrency assets instead of selling them, especially when borrowers need to make large purchases.
Zac Prince, founder, and CEO of BlockFi believes that the startup can service an emerging market which is currently neglected by traditional lenders. In an interview with Magazine, “Banks are very slow moving and risk-averse,” said Prince. “Even in markets where there isn’t a regulatory concern, like unsecured consumer or student lending, there is room for non-bank lenders like and to build large businesses.”
Prince believes that BlockFi can follow Sofi and the Lending Club to become a large company in this niche market.
Blockfi Provides a New Option for Borrowers with Cryptocurrencies
According to BlockFi’s official website, the New York-based company is providing crypto-backed loans with the standard interest rate of 12 percent, 35 percent loan to value, with a maximum loan duration of 12 months. The startup plans to have its operation in 35 U.S. states, offering its services to institutions, companies as well as individuals.
“We have issued both consumer and business loans to date, ranging from $5,000 to $250,000,” said Prince. “We should have an announcement coming out in early Q2 regarding a capital partnership that will give us the capacity to lend up to $2,500,000.”
BlockFi will raise further capital in Q2 to provide loans. They are also looking to undergo a Series A raising round that will be announced in the second half of 2018.
The Origins of Blockfi and its Current Development
Blockfi’s origins began with Prince’s difficult loaning experience with traditional banks. He listed bitcoin as an asset, in the hope of receiving loan approval. The bank, however, did not acknowledge as an asset, especially since it’s strongly associated with money laundering, drugs, and crime. It was during Prince’s difficulties that he saw an opportunity to serve borrowers who wanted to use their cryptocurrency assets as collateral.
Prince co-founded BlockFi with Flori Marquez, receiving seed funding of $1.55m on February 13, 2018. BlockFi’s strategic partners include , , , Sofi, , and .
We were fortunate to have a strong interest in our seed round and are excited about the strategic value that our investor base adds to our efforts,” said Prince.
BlockFi plans to expand internationally in 2019, with India, Mexico, and South America as possible destinations. “We see an opportunity to offer access to low-cost credit in markets where it historically hasn’t been available. India, Mexico, and South America are of particular interest to us,” said Prince.
BlockFi and other similar crypto-backed lending companies may potentially shift the public’s view when it comes to the legitimacy of cryptocurrency as collateral. However, they are still a relatively new startup. “Although this has the potential of revolutionizing credit markets, we are still in the very early stages of development,” said Lucas Nuzzi, a senior analyst at Digital Asset Research.
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OKEx, the cryptocurrency trading platform owned and operated by OKCoin in Hong Kong has denied allegations of its involvement in the attempted manipulation of its market. In a published on the platform’s website, OKEx offered a robust repudiation of such claims by addressing all the different rumors that had been making the rounds over the matter.
Setting the Record Straight
The platform began by giving a account of the events that transpired leading up to the attempted manipulation of their bitcoin futures market as well as the step taken by the platform. The statement also touched on the establishment of “price limit rules” that will prevent the recurrence of such manipulation in future.
Commenting on the spinning rumor mill that had been on overdrive since the incident, maintained that it is reputable digital asset firm with millions of customers. The statement also offered a defense for the platform’s choice to rollback all futures contracts data saying that it must protect its customers. The platform also clarified its position as a provider of order book services and that it doesn’t participate directly in any of the trades.
On the subject of knowingly manipulating the market or being involved in the attempt to manipulate prices, OKEx declared that its revenue stream comes solely from trading fees and it earns nothing from price volatility. Hence, it has no reason to manipulate the market prices. The statement offered a complete and robust denial of the manipulation charges maintaining that it is committed to maintaining the market stability of which price manipulation would be counterproductive to such goals.
One of the more potentially damning aspect to the rumors that had been ubiquitous on the internet in the aftermath of the rollback had been screenshots of charts purportedly from the OKEx platform. The statement addressed these screenshots calling them a false representation of the market situation on the platform. It also made sure to offer up legitimate screenshots, asking the general public to compare and take note.
The Crux of the Matter
On Friday, March 30, 2018, OKEx temporarily halted futures trading on its platform after noticing some irregular activities. According to a statement by the platform, between 9 pm and 10:30 pm UTC, many irregular selloffs occurred on the platform prompting red flags to be raised immediately. These selloffs forced the quarterly to fall significantly below its market price.
In response, the platform halted all trading activities and after which it decided upon exhaustive internal consultations to rollback all futures contracts data. The rollback was for all weekly, bi-weekly, and quarterly transactions, undoing all transactions up to 8:47 pm UTC on Friday, March 30, 2018. As part of measures to compensate its customers, OKEx also announced a seven-day waiver for transaction fees. The platform also declared that it would continue to launch more incentive campaigns to reward loyal customers.
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