Crypto lending startup BlockFi secured more than $52mn in funding from Mike Novogratz’s Galaxy Digital Ventures. The round will be split up; $2.5mn is in equity being led by Galaxy and other early backers and the additional $50mn will be used as a lending facility for BlockFi customers.
BlockFi allows individuals and companies to leverage bitcoin and ether for what they term as low cost USD loans. They have built out an operation focused on risk management, compliance and regulation. They operate in 42 states where they hold lending licenses.
The way it works is crypto holders give custody of their bitcoin or ether to BlockFi who then issues the loan typically on a 12-month loan term. Borrowers make interest only payments monthly and then have the option to pay back or refinance at the end of the loan term. The loan to value of their crypto assets is set at 35% and if the price of the crypto assets fall to a certain point then trigger events occur similar to a margin call.