BlockFi raises rates just days after FTX’s $250million bailout.
Most Crypto Broker or Lending platforms took major hits as their own share of the crypto downturn. Some of them being outrightly liquidated or are on the brink of liquidations. In what has been a major dip in the overall crypto market, that has seen the Market Capitalization drop from $3Trillion to $850Billion. It is a wild guess as to where the market downturn will grind to a halt.
What is BlockFi?
According to its website BlockFi.com it is a fintech company that
was created to provide credit services to markets with limited access to simple financial products. BlockFi sets itself apart from other crypto service providers by pairing competitive rates with institutional-quality benefits. BlockFi is the only independent lender with institutional backing from investors that include Valar Ventures, Galaxy Digital, Fidelity, Akuna Capital, SoFi, and Coinbase Ventures.
Okay, yeah yeah! If they were doing all of those efficiently why did they need a bailout fund? We will get to that soon.
So basically, what Blockfi does is take your crypto deposits from you, since you might not have need for selling it. Then you can borrow against it if you will to fund your vacation or buy that flashy Tesla car you have ever wanted or maybe get married to the love of your life. . They also lend out crypto to borrowers and charge interests on those loans.
The render same service your traditional banks would offer you but this time on steroids on the blockchain.
The Federal government loans the banks money and regulates them. These Crypto Broker companies aren’t regulated by any government. So they collect crypto, give you interest on it and then lend it out to borrowers who pay a premium on them.
Blockfi has said it will be raising it interest rates across board on its lending products.
According to the company it said it will be able to do this thanks to effective risk management, coupled with a market competition that is now decreasing.
Blockfi raises rates on the backdrop of Sam Bankman Fried’s FTX loan to help bolster Blockfi’s balance sheet. The fintech company has been having some challenges which has some sort been handled under the radar very well until now. At the beginning of the market collapse it had downsized its workforce by 20%.
Nebo Finance gathered that the company lost some $285 million in the last two years, even though these cant be confirmed yet.