Crypto lending platform BlockFi liquidated a large client after it failed to meet obligations on an overcollateralized margin loan, the company’s founder and CEO Zac Prince announced June 16.
BlockFi can confirm that we exercised our best business judgment recently with a large client that failed to meet its obligations on an overcollateralized margin loan. We fully accelerated the loan and fully liquidated or hedged all the associated collateral.
— Zac Prince (@BlockFiZac) June 16, 2022
Prince’s disclosure came after Singapore-based crypto hedge fund Three Arrows Capital (3AC) failed to meet margin calls from its lenders following this week’s crash. According to a Financial Times report, BlockFi was among the lenders.
Assuring users of the soundness of BlockFi’s risk management practices, Prince said they allow the company to act decisively to mitigate risk. He divulged that these practices include margin calls and asset liquidation when necessary.
Enforcing strict risk management practices to protect investors
Prince said client funds are safe as BlockFi was one of the first to act after the client failed to meet margin calls. He added that BlockFi continues to lend and operate as usual across the world.
Despite the turmoil in the crypto market, Prince said BlockFi strives to offer its retail customers as much yield as possible. He added that the firm will announce new rates in the coming weeks, which will come into effect fromJuly 1.
The BlockFi executive concluded:
I couldn’t be more proud of how our people, processes, and systems have performed through this period of market volatility. BlockFi is here for our clients, and we’re here for the long haul.
Crypto bears continue devastating industry players
Prince’s reassurance efforts to BlockFi users come after Celsius Network halted withdrawals, swaps, and transfers on its platform on Sunday due to liquidity issues. Celsius has yet to announce a recovery plan.
.@CelsiusNetwork is working around the clock for our community. It’s all hands on deck, so there will be no Twitter Spaces this week.
— Celsius (@CelsiusNetwork) June 14, 2022
Meanwhile, Finblox, a Hong Kong-based crypto staking and yield-earning platform, has reduced the monthly withdrawal limit to $1,500 amid mounting fears of 3AC’s possible insolvency.
In a June 16 statement, Finblox — which secured a $3.6 million investment from 3AC in December 2021 — said it reduced the withdrawal limit as it evaluates 3AC’s impact on its liquidity.
IMPORTANT UPDATE FROM FINBLOX! pic.twitter.com/VjclRMMiSe
— Finblox (@finblox) June 16, 2022
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