Report: BlockFi Holds $1.8 Billion in Outstanding Loans in Q2

Centralized cryptocurrency lender BlockFi disclosed that it had $1.8 billion in outstanding loans from institutional and retail investors at the end of the second quarter, with a “net exposure” of $600 million.

The data comes from BlockFi’s “Q2 2022 Transparency Report,” released on Thursday, in which BlockFi outlined risks related to liquidity and credit and shared details of its institutional and retail loan portfolios. BlockFi reported that of borrowers’ outstanding loans worth $1.8 billion, $600 million was unsecured.

Institutional loans accounted for $1.5 billion of total loans outstanding, while retail loans accounted for the remaining $300 million. BlockFi uses the bitcoin price of $19,986 as a reference point to measure its bitcoin holdings and outstanding loan amounts.

BlockFi said it has developed guidelines to help it “maintain the necessary liquidity to meet all of our obligations under core business activities, which include institutional and retail lending and trading activities.”

These guidelines state that at the request of customers, the company will hold at least 10% of the total amount due to customers as inventory, which will be returned to customers at any time.

BlockFi also deposits at least 50% of the balance owed in a location that can be retrieved and returned to the customer within 7 days, and deposits at least 90% of the balance owed in an inventory or loan that can be collected within a year.

A few weeks before the new liquidity guidelines, BlockFi and cryptocurrency exchange FTX.US signed an agreement to provide BlockFi with a $400 million "credit facility" and up to $240 million based on performance. Acquired BlockFi at a price.

Three Arrows Capital (3AC) has reportedly defaulted on a loan from BlockFi.

In an article published Wednesday outlining its risk management, BlockFi explained that it only makes unsecured loans to borrowers it considers "Tier 1" customers. Tier 1 clients are institutional clients who have a “significant capital base, whose financial statements have been audited by a reputable third party, and who are willing to be transparent and proactive with BlockFi.”

For "Tier 2" and "Tier 3" customers, BlockFi will not issue unsecured loans.