Binance and CZ fight back with a motion of dismissal
Following the lawsuits against Binance from the SEC, the exchange and its CEO have filed a motion of dismissal.
According to a report from Bloomberg, lenders who operate within the cryptocurrency sphere are currently finding high demand from investors who do not wish to sell their cryptocurrency tokens at the reduced values they have dropped to. Loan firms are enabling these people to withdraw fiat currency by using their crypto tokens as collateral. This way, those who believe the market will turn bullish once again can continue paying their bills while waiting for the rebound.
A prime example of this is the crypto based lending company, BlockFi. This firm allows clients to withdraw U.S. dollars in exchange for bitcoin (BTC) ethereum (ETH) or litecoin(LTC)as collateral security for repayment. This means crypto investors can use their coins to obtain fiat finance without actually selling them.
‘Low-Risk’ lending
If the value of the collateral drops significantly in value, clients will have to place more finance into it or face having their crypto holdings sold off. This is referred to as a margin call. Margin calls at BlockFi are activated if the value of the collateral falls by 35 to 60 percent from the time the loan was granted. CEO Zac Prince claims that around 20 percent of clients faced margin calls last year. Many of these borrowers added extra collateral upon receiving the warning.
According to Bloomberg, Prince has said in a phone interview that their method is a “low risk type of lending” after declaring that the company has never had a “loss of principal.”
BlockFi has grown tenfold since June of 2018, according to Bloomberg. It was right around this time that large blockchain investment company Galaxy Digital Ventures invested $52.5 million USD into the firm.
Other lenders benefiting from the current economic situation include the Genesis Capital group. This company operates in the inverse of BlockFi; lending cryptocurrency in exchange for U.S. dollars. Genesis Capital has issued the equivalent of $700 million USD in loans since March, according to Bloomberg. The chief executive officer of Genesis Capital, Michael Moro, has reportedly said that “the bear market has certainly helped, at least has fueled the growth.”
Genesis plans to more than double its staff in the coming year to as many as 12 people, while other companies in the crypto sphere have been contemplating layoffs.