Crypto lenders in the market have been severely struggling to handle liquidity challenges. On Tuesday, July 12, crypto lender BlockFi announced that it will no longer be accepting Grayscale’s GBTC shares as collateral.
Following the news, the GBTC stock (OTCMKTS: GBTC) collapsed 5% on Tuesday ending at $12.21. Amid the Bitcoin price correction, the GBTC stock has been on a freefall this year. The share price of Grayscale Bitcoin Trust (GBTC) has corrected by nearly 65% year-to-date.
The recent decision from BlockFi highlights the fragility of the crypto lending industry and its exposure to insolvent companies. Grayscale had exposure to Three Arrows Capital, which was holding more than 5% of GBTC stock at one point in time.
Due to its bad debt with Three Arrows, BlockFi is already suffering losses to the tune of $80 million. BlockFi CEO Zac Prince spoke about their exposure in 3AC and added that they will be part of the embattled hedge fund’s ongoing bankruptcy case.
BlockFi Unwound Its GBTC Position
As per the latest information, BlockFi has already unwound all its GBTC position. On Tuesday, July 12, Zac Price replied to Meltem Demirors regarding the same. Prince tweeted:
