The cryptocurrency market is revealing unsettling information almost every day leaving investors and users exasperated. On Thursday, crypto lending platform BlockFi accepted liquidating a large client for failing to meet its obligations on an overcollateralized margin loan. A report claimed that BlockFi was among the companies that liquidated at least some of the Three Arrows’ positions as the hedge fund failed to meet margin calls.
However, the CEO of BlockFi Zac Prince offered clarity about its risk management practices and systems without naming the name of the “large client”.
As per the CEO of the lending firm, Blockfi’s risk management practices aim to protect the interest of its broader client base as well as allow the companies to rally regardless of the market conditions. This explanation from the CEO comes amid market stupefaction after major lending platform Celsius Network Ltd halted withdrawals on Sunday. This was followed by Three Arrows Capital failing to meet lender margin calls.
The users’ were now concerned about a domino effect that could cause more suffering for other companies in the space. Prince assured that the lending platform continued its normal operations after, and no client funds were impacted.
Similarly, Deribit, whose parent company counted Three Arrows as a shareholder also noted to remain “financially healthy” despite having a net debt that, it considers “potentially distressed.”
The exchange noted,
“Even in the event that none of this debt is repaid to us, we will remain financially healthy and operations will not be impacted.
We can confirm all customer funds are safe and the full insurance fund will remain intact as is. Any potential losses will be covered by Deribit.”
Meanwhile, BlockFi’s CEO assured users that the lending platform was fulfilling increased demand from institutional borrowers at higher interest rates, similar to rate moves in traditional markets. Prince concluded,
“Over the past five years, BlockFi has been battle-tested through all types of market conditions. Throughout this current period of market volatility, BlockFi continues to fulfill all withdrawal requests pursuant to our terms of service.”