BlockFi, a startup that offers U.S. dollar loans against crypto collateral, has raised $4 million from Mike Novogratz’s Galaxy Digital and others.
Crypto-lending firm BlockFi raised $52.5 million in a fundraising round led by Mike Novogratz’s Galaxy Digital, Business Insider reported Tuesday.
BlockFi, which aims to lend individuals and companies loans using bitcoin and ether holdings as collateral, plans to use the funds to grow the business outside of the U.S., as well as add support for more digital assets to the platform.
The startup offers services in 35 U.S. states and functions similarly to a traditional bank in that it holds clients’ funds with a registered custodian and reports loan performance information to the major credit bureaus.
The company is now looking to expand to more states and other countries, as well as add additional cryptocurrencies and new products. These products could include fixed-income and debt investments, lines of credit and credit cards, BlockFi CEO Zac Prince told Business Insider.
As part of this expansion, the company has hired former Bank of America managing director Rene van Kesteren as chief risk officer.
The funding round follows BlockFi’s previous $1.55 million raise from ConsenSys Ventures, SoFi and Kenetic Capital. ConsenSys managing partner Kavita Gupta previously told CoinDesk that she believed that BlockFi’s work can reduce volatility on the cryptocurrency market.
“This market needs access to debt beyond fragmented, short term margin trading options in order to reduce volatility, facilitate scale and put the financial infrastructure for this ecosystem on par with other asset classes,” Gupta said.
Mike Novogratz, an outspoken cryptocurrency advocate and investor, raised $250 million earlier this year for Galaxy Digital which is designed to to trade and manage cryptocurrency assets and consult blockchain startups.
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New York-based startup BlockFi, which provides loans to crypto-asset owners using their bitcoin and ether holdings as collateral, has secured $1.55 million in a just-closed funding round.
The company, which received backing from ConsenSys Ventures, SoFi and Kenetic Capital among others, wants to “bridge the gap” between capital markets and the cryptocurrency ecosystem, according to a press release. In doing so, the company expects to tap into a market of new investors who need to borrow funds.
While the company does deal with crypto assets, it otherwise functions as any other lender would: clients’ cryptoassets are held by a registered custodian and loan performance data is reported to the major credit bureaus to update borrowers’ credit scores.
BlockFi chief executive Zac Prince said the existence of crypto assets has opened up new opportunities in lending, according to the statement.
“By bringing institutional quality technology infrastructure, data science, risk management and operations to the cryptoasset market, we aim to be the leading lender in the cryptoasset market and a leading provider of low cost credit globally.”
The company will initially operate in 35 U.S. states, lending to individuals, companies and institutions.
BlockFi’s mission will help reduce volatility in the crypto asset market, said ConsenSys managing partner Kavita Gupta.
“This market needs access to debt beyond fragmented, short term margin trading options in order to reduce volatility, facilitate scale and put the financial infrastructure for this ecosystem on par with other asset classes,” she said.
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