BLOCKCHAIN
BLOCKCHAIN
BLOCKCHAIN
Cryptocurrency lending firm BlockFi raises $18.3M from Peter Thiel’s Valar Ventures
Cryptocurrency lending firm BlockFi Lending LLC has raised $18.3 million to add new products to its existing platform of interest-earning accounts for bitcoin and crypto-backed U.S. dollar loans.
Founded in 2017, BlockFi operates as a nonbank lender that offers crypto-backed loans that allow investors to borrow against their cryptocurrency holdings as equity. The money the company loans conversely comes from an offering that allows crypto investors to deposit their cryptocurrency holdings in an interest account that promises returns of up to 6.2% annually.
The company only accepts deposits in bitcoin, Ethereum and Gemini Dollar, the latter the Winklevoss Capital cryptocurrency. For loans, collateral must be in bitcoin, Ethereum or Litecoin with a fairly high equity-to-loan ratio. As of today, to borrow $25,000 from BlockFi, a potential borrower would be required to offer 4.46 bitcoin as equity, currently worth around $51,000.
“For the first time in history, we are able to leverage the borderless nature of crypto to enhance the value, speed and reach of financial products,” BlockFi co-founder Flori Marquez said in a statement. “We differentiated ourselves since inception by focusing on building a compliance-focused platform that aims to bridge blockchain technology with the existing financial systems of the world.”
The venture capital round is notable for its lead investor. Valar Ventures is one of three venture firms back by Peter Thiel and has also invested in millennial-focused credit-card issuer Petal, Berlin-based startup Number26 and U.K. money transfer startup TransferWise Ltd.
“What’s very interesting about BlockFi is how they are bringing traditional financial services to this world,” Valar co-founder Andrew McCormack told Bloomberg. “As the cryptocurrency markets evolve, you will start to see more and more companies that provide a lot of block-and-tackling that traditional bank or other market makers have provided in the fiat world for centuries.”
The Series A round announced today was led by Valar Ventures and included Winklevoss Capital, Galaxy Digital, ConsenSys Ventures, Akuna Capital, Avon Ventures, Susquehanna, CMT Digital, Morgan Creek and PJC.
Including a $50 million lending facility from Galaxy Digital in July 2018, BlockFi has raised $78.7 million to date inclusive of its new round.
Image: BlockFi
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