De-valuation – Fundraisers are not all alike in the cryptosphere. The BlockFi cryptocurrency lending platform can attest to this with its funding round conducted in a bearish backdrop.
BlockFi fundraiser: another company victim of the crypto winter
BlockFi will soon close a particular funding round qualified as down rounddue to the fall in the company’s valuation.
This round table will in fact bring this valuation to $1 billion. This figure however rose to 3 billion dollars after raising 350 million dollars in March 2021.
How can we explain this significant regression? During the March fundraiser of last year, the company published figures reflecting its strong growth. It then had a loan book of 10 billion dollars. The platform also boasted of its 265,000 retail accounts.
But BlockFi must now face a difficult year 2022. Crypto winter has been setting in for months. And it impacts the financial performance of companies in the sector.
Bear markets have even forced major cryptocurrency exchanges to freeze recruitment and layoffs.
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Crypto lending platforms and the vagaries of regulation
Cryptocurrency lending and savings platforms also have to deal with another major problem: that of theregulatory uncertainty which can penalize their activities.
These inaccuracies or regulatory gaps may costly to companies in the sector. BlockFi, for example, had to pay 100 million dollars in penalties to the SEC. This payment was intended to end the battle with the regulator.
The Commission had put pressure on Blockfi, opening an investigation into its savings products. The SEC wanted to determine whether or not these possess the characteristics of an offering of non-registered securities.
But despite this hefty bill and the bearish context, the company still continues to speak resolutely optimistically.
In its statements to the media The Block, the company says it wants to offer another product similar to its remunerated savings. The launch of such an offer will however be after obtaining regulatory approvals required.
BlockFi’s valuation therefore followed the downward movement of cryptocurrency prices in 2022. The crypto winter will not last forever. The good days will return with perhaps an impressive recovery of Bitcoin. But in the meantime, companies in the sector must show resilience.
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