Crypto Lender SALT Makes Comeback With 64.4 Million Funding - DropTown

Crypto lender SALT makes comeback with $64.4 million funding.
The crypto winter and FTX collapse has decimated the ranks of cryptocurrency lenders. Genesis, BlockFi, Voyageur Digital and Celsius Network all filed for bankruptcy in the past seven months, and the contagion may still not be over. But at least one crypto lender appears to be on the comeback trail.
SALT Lending, one of the world’s first cryptocurrency lenders, announced Feb. 8 that it has closed a $64.4 million financing that will strengthen its balance sheet and replenish its capital reserves. Accredited investors will receive shares of the company’s preferred stock in return for their funding. Though the Series A recapitalization effort is still subject to approval by regulatory authorities, it should allow the company to return to full operation in the first quarter.
As reported, Denver-based SALT Lending announced a "pause," i.e. a freeze, on withdrawals and deposits to its lending platform in mid November, shortly after the FTX crash. Like some other crypto firms, SALT had used the Bahamas-based FTX as a source of liquidity for its lending operations.
"Crypto faced a perfect winter storm in 2022, taking with it significant industry participants like Terraform Labs, Voyager Digital, Celsius Network, Three Arrows Capital, FTX, and BlockFi. SALT was not immune to these market forces, but we are determined to emerge stronger than ever," Shawn Owen, founder and interim CEO of SALT, said in an announcement today.
While SALT Lending never filed for bankruptcy, its November freeze on withdrawals set off a mini tempest on social media. The firm also lost its California lending license, and a deal to sell the company to BnkToTheFuture was jettisoned.
The California license remains suspended, though Owen told Cointelegraph in an interview that it’s working with the state’s regulators to get it restored. "We’re staying as transparent as we can, and we’re educating them on all the details of exactly how the business model works." But Owen still can’t say at this point if and when the license will be restored. "You can’t guarantee anything because they do have discretion. But we’re doing everything we can to be good actors."
A Series B funding round in 2023.
SALT plans to seek further funding later in 2023 — an anticipated Series B financing in the $100 million size range — to further build out its capital buffer, Owen told Cointelegraph.
FTX’s collapse clearly impacted SALT’s business. "We had accounts on FTX," said Owen. He was stunned when the Bahamas-based exchange suddenly collapsed. "We felt up until 48 hours before [it crashed] that FTX was another platform that had good liquidity and a good interface and was one of ours."
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Individuals and businesses can secure fiat loans using Bitcoin (BTC) and other cryptocurrencies as collateral on SALT’s platform, but sometimes borrowers want to pay off their loans and recover their collateral.
Thus, cryptocurrency a lender like SALT has to be able to prove that it "can sell collateral pretty much instantaneously at a certain price," he further explained. "And in order to do that, you have to have relationships with buyers — or you have to be the buyer." Hence the need for further capital.
The November freeze on withdrawals and deposits "was terrifying for our customers. As you’d imagine, some of them had already been locked up and lost money in both Celsius and Blockfi. So they were thinking, ‘This is just another one. Everything’s going down.’"
It took a Herculean effort to calm things down, he suggested. "I’ve literally been working days, nights, weekends for 60 plus days solid, speaking to people directly." He had a mission "to speak to every one of our customers in person."
Asked about the firm’s customers, Owen said they were primarily individuals and businesses holding and saving Bitcoin for the long term, as BTC is the predominant value on SALT’s platform. Customers are looking to monetize their crypto "whether it’s for buying real estate, paying bills or what not" but they need to have confidence that they can pay off the loan and get their collateral back if they so desire.
Founded in 2016, SALT claims to be the first platform to launch collateralized blockchain-backed loans, though it remains a relatively small player compared with three other firms with which it is often compared, BlockFi, Celsius and Nexo.
But when FTX imploded, "it shocked us beyond what we were prepared for" and so we "ducked our heads and just said, ‘We don’t know how bad this contagion is. We’d better figure out exactly where this goes.’"
That’s when the firm decided to "basically pause our service" to protect capital, said Owen. "That was something we’d never done before. The business was never planned to be an on off switch or to be turned on and off."
More regulation needed?
A lot of other people were surprised and shocked too, of course, and calls were heard almost immediately for the crypto industry to be better regulated. Is regulation something that crypto lenders are just going to have to live with in coming years?
"In our opinion the regulation is already here." In the U.S lenders are required to be licensed on a state by state basis. The problem wasn’t an absence of laws or rules. "It was simply that they were not following rules," Retail customers were encouraged to deposit funds on platforms that were neither banks nor registered securities firms and in return were able to earn outsize "yields." "That clearly was illegal and we never did that. I don’t think that that will ever be allowed now that the public is well informed," said Owen.
Others believe that all the crypto lending bankruptcies have created a market vacuum, and traditional financial institutions like banks will now rush in to fill the void. Owen’s view?
"I do think that banks will get involved when they can, but I don’t think we’re close to that right now." Recent events have discouraged their participation. "We’re seeing a lot of pullback." In fact, many banks today have more appetite for central bankd digital currencies than they do for crypto, he believes.
"If you would have asked me a year ago, I would have said that banks were probably getting a lot more interested. If you’re asking me today, I would say they’re probably at least three or four years out."
Beware of counterparty risk.
Have any lessons been learned in the past year? "The overarching one is fraud. You have to always watch out for counterparty risk because there are bad actors." But there are some concrete steps that can be taken right now.
"First and foremost, it’s the principle of having collateral to back any kind of loan." So many of the meltdowns of the past year were the result of unsecured lending. "Lending can be much safer if you’re lending against an asset that’s over-collateralized."
A second lesson is transparency. "I think a lot of people feel very taken advantage of because they were told one thing and it turned out to be something else." And a third lesson is the need for capital reserves. There’s no FDIC Insurance for crypto, so having sufficient capital reserves is especially important, "which is why we want to ramp up for a large Series B $100 million-plus funding round, because to expand our model we’re going to require significant capital reserves, much more like a bank."
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The crypto sector isn’t out of the woods yet, but SALT Lending’s interim CEO believes a healthier industry is going to emerge eventually.
"One thing about Bitcoin and crypto is that it’s ‘antifragile,’ to use a technical term." It’s used to coming under attack, and each time it emerges more robust than the time before. "I think right now it’s no question we’ll come back a lot stronger."
Owen doesn’t know if the storm is over yet, "though it feels like we’re through the worst of it. But I don’t want to jinx us."
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NFT News.
FTX Founder Sam Bankman-Fried’s Two Bond Guarantors Have Finally Been Unveiled – Court Documents Revealed Here.
February 16, 2023.
Sam Bankman-Fried. Source: a video screenshot, Forbes / YouTube.
The two mysterious co-signers on FTX founder Sam Bankman-Fried’s bond managed to keep their identities hidden for a long time, but new court documents have finally revealed who they are.
The two previously unidentified individuals are Andreas Paepcke and Larry Kramer. Paepcke is a senior research scientist at Stanford University, and Kramer previously served as the dean of Stanford Law School.
Bankman-Fried’s parents Joseph Bankman and Barbara Fried are both law professors at Stanford University.
According to the newly released documents, Paepcke and Kramer put up $200,000 and $500,000, respectively, to help secure Bankman-Fried’s release from jail.
Largest pretrial bond in memory.
Bankman-Fried was released from jail in December last year after posting a $250m bond in a New York court. The massive size of the bond has raised eyebrows, and US Attorney Nicolas Roos said at the time that the bond was the largest pretrial bond that he could recall.
The only known co-signers of the bond at the time Bankman-Fried was released was his parents, who put up their Palo Alto, California home as collateral for the bond.
Given that the relatively modest home is not worth anywhere near $250m, however, it has long been unclear what role the two additional co-signers had in securing Bankman-Fried’s release. However, it now appears that the additional $700,000 put up by the two individuals was enough to satisfy the requirements for the bond.
A report from The Daily Beast on Wednesday indicated that Bankman-Fried’s legal team has fought against multiple attempts by the media to reveal who the additional co-signers were. Still, they eventually chose not to appeal a decision by the judge in the case to reveal the names, the report said, citing a person familiar with the matter.
Friendship with Bankman-Fried’s parents.
In a statement provided to CoinDesk on Wednesday, Larry Kramer said that it was his close friendship with Bankman-Fried’s parents that led him to sign and put up the half a million dollars for the bond.
Kramer explained that Joseph Bankman and Barbara Fried had offered care when his own family battled with cancer, and that he therefore wanted to support them "as they face their own crisis."
"My actions are in my personal capacity, and I have no business dealings or interest in this matter other than to help our loyal and steadfast friends. Nor do I have any comment or position regarding the substance of the legal matter itself, which is what the trial will be for," Kramer was quoted as saying.
Sam Bankman-Fried was arrested in The Bahamas – where his exchange was headquartered – on December 13. He was initially held at the country’s infamous Fox Hill detention center, before being extradited to the United States and released on bail.
He has pleaded not guilty to criminal charges, but admitted that certain mistakes were made during his time as the head of FTX.
NFT News.
Japan’s SBI Buys Crypto Exchange Rival Bitpoint.
February 16, 2023.
Source: Pixs:sell/Adobe.
The Japanese securities giant SBI has completed a takeover of the rival crypto exchange Bitpoint. The move consolidates the firm’s increasingly tight grip on the domestic crypto market – and marks the second time it has taken over a domestic rival.
SBI confirmed the move in a post on its website. The company snapped up a controlling (51%) stake in Bitpoint back in May last year. But, the firm wrote, it has now agreed a deal to buy the remaining 49% of Bitpoint’s share. The company did not disclose how much it had paid for the shares.
SBI explained that it would move to make Bitpoint a "wholly owned subsidiary" firm. The company also outright owns the TaoTao crypto trading platform – an exchange that was formerly part-owned by Yahoo Japan. SBI bought TaoTao in 2020. SBI also operates SBI VC Trade, its own organic crypto exchange.
SBI noted that it would use liquidity from its UK-based subsidiary B2C2 to improve existing Bitpoint services. The firm added that it may look to list gaming-related tokens on the platform in the future.
Bitpoint was founded by the points system operator Remixpoint.
Japanese Securities Giants Muscling out Local Crypto Exchange Startups?
The Japanese crypto exchange scene has traditionally been dominated by smaller domestic startups, such as the market-leading bitFlyer.
One-year trading volumes at the Japanese crypto exchange bitFlyer. (Source: CoinGecko)
However, in recent years, cryptocurrency securities firms have become increasingly keen on entering the market – and reducing the number of firms they have to compete with.
The Monex Group, one of SBI’s biggest securities market rivals, bought the Coincheck exchange in 2018. Monex has also been linked with a possible bid for the FTX Japan trading platform, which will be sold by a US bankruptcy court later this year.
Other big-name industries active in the scene include the South Korean-Japanese chat app giant Line and the e-commerce titan Rakuten. Both of these firms operate their own exchanges.
In addition to its exchange interests, SBI also operates a crypto mining subsidiary called SBI Crypto. SBI also operates the SBI-Ripple Asia blockchain network in conjunction with America’s Ripple.
NFT News.
How to buy and sell NFTs on Polygon.
February 16, 2023.
While cryptocurrencies have been quite the rage over the past couple of years, nonfungible tokens (NFTs) have risen as an alternate asset class within the cryptocurrency ecosystem. This ecosystem is revolutionizing the world of art and gaming, among a host of other industries.
Serving as a digital certificate that proves a collectible’s authenticity, NFTs also provide investors with proof of ownership and utmost security, aspects that have been instrumental in their proliferation as the future of representing real-world objects in the virtual world.
As a result, NFTs are gaining increasing popularity among crypto investors looking to invest in metaverse platforms, with many purchasing these unique digital assets on blockchain protocols like Polygon using cryptocurrencies. A layer-2 Ethereum protocol, Polygon has emerged as the preferred platform for many NFT marketplaces that offer investors the opportunity to create, buy and sell NFTs.
Understanding the Polygon blockchain.
Designed to address Ethereum’s scalability concerns, the Polygon network acts as a parallel blockchain or sidechain that runs alongside the Ethereum blockchain and uses a proof-of-stake (PoS) consensus mechanism to validate on-chain transactions.
Apart from providing the security, interoperability and smart contract features of the Ethereum blockchain, Polygon boasts significantly lower transaction fees, or gas, and offers developers a much higher degree of flexibility and scalability than that provided by Ethereum.
In fact, Polygon has come to be known as a multichain network of Ethereum-compatible blockchains. This is largely due to its ability to deploy other blockchain networks and enable communication among them, making it most suitable for developing decentralized applications (DApps).
With its Finity Design System and Polygon Bridge, developers can not only build cross-platform DApps but also connect them to other compatible blockchain networks to transfer assets such as ERC-20 tokens and NFTs to the Polygon sidechain. Consequently, developers prefer Polygon to create NFT projects that have a high frequency of low-value transactions. They also use it to set up NFT marketplaces that enable users to list NFTs for a small fee.
How to create free NFTs on Polygon.
To facilitate artists and content creators in jumping onto the NFT bandwagon, a number of platforms using the Polygon blockchain to host nonfungible tokens offer their users the ability to mint NFTs for free. Polygon NFT marketplaces such as OpenSea and Rarible provide the option of "lazy minting," a functionality by which nonfungible token creators can monetize their content with no upfront cost involved.
It is because the NFT in question is actually minted when a user buys it. As a result, not only does this reduce the number of transactions that get relayed onto Ethereum but it also ensures that the buyer pays for the applicable gas rather than the NFT creator.
In terms of the steps to follow, an NFT creator needs to first select or create a digital file that will be converted into a bespoke nonfungible token. This file could be an image, video, GIF or even a song that will be used to create an immutable version of it on the Polygon blockchain.
Even in the case of "lazy minting," it is necessary for the NFT creator to have a crypto wallet with sufficient amounts of Polygon’s MATIC or Ether (ETH) tokens available to cover any fees that may be applicable at a later stage.
Once both of these requirements are fulfilled, a nonfungible token creator needs to choose from the different NFT marketplaces available on Polygon and connect their crypto wallet to sign in. After completing this step, the digital file needs to be uploaded onto the marketplace.
To do so, click on the "Free Minting" option and sign the minting authorizations that need to be provided to the marketplace. Upon completing this final step, the NFT will be put up for sale on the marketplace and will be available for purchase by other users.
The NFT remains listed on the respective marketplace, while all its related data is stored on the InterPlanetary File System, a distributed file storage protocol that permits anyone with a computer to store and share files as part of its giant peer-to-peer network.
By linking their crypto wallets with the marketplace and receiving minting permissions, NFT creators are assured that their NFT is minted as soon as the funds are deposited by the buyer and the same are then credited to their crypto wallet, without any additional hassles.
In the event that the NFT’s creator wants to delist or "burn" an NFT that has been minted via this option, cryptocurrency they’ll have to pay an applicable gas fee before taking down the NFT from the marketplace.
How to purchase NFTs on Polygon.
For investors and NFT enthusiasts who are inquisitive about how to buy NFTs on Polygon, their journey would have to begin with any of the NFT aggregators or marketplaces on the blockchain network. They may choose from Polygon NFT marketplaces such as Floor, TixHive, NFTrade, Candy Shop and Hodl My Moon in addition to OpenSea and Rarible marketplaces.
While Hodl My Moon and TixHive are aggregators that exclusively work with the Polygon network, the others are examples of multichain marketplaces that facilitate transactions across blockchain networks, such as Ethereum, Solana and BNB Smart Chain among others.
Users will have to link their Polygon NFT wallet with the chosen marketplace and then proceed to browse through NFT collections available on Polygon. Depending on whether it is a fixed-price sale or an auction, the process of purchasing NFTs differs slightly for platforms such as OpenSea. For fixed-price NFTs, users can add one or more of such NFTs to their cart and pay for them in one single purchase flow.
After clicking "Add to Cart," the user needs to navigate to the cart and invest in nft finish the buying process by clicking on the "Complete Purchase" option. Upon doing this, the user will be redirected to the wallet window where the signature request has to be accepted after switching the wallet’s network to that of Polygon.
For fixed-price NFT sales, the type of token depends on the preference set by the seller and, therefore, the buyer will have to comply with the price. For Polygon NFTs, the most common preference is that of Polygon ETH or MATIC tokens, with the former being bridged to the Polygon network.
By bridging ETH tokens to the Polygon network, users can save on the high and volatile gas or transaction fees requested by the Ethereum network, thereby bringing down the cost of acquisition.
To make an offer for an NFT or to place a bid for an auctioned NFT, users will need to lock ETH in a Wrapped Ether (wETH) smart contract to place pre-authorized bids, without the need for any additional input from the buyer.
The wETH smart contract mines an equivalent amount of wETH tokens when ETH funds are held in it, with the wETH tokens appearing in the user’s wallet until it is used in a bid.
How to sell NFTs on Polygon.
After minting an NFT, the digital collectible will be visible in the "My Collections" tab on the OpenSea marketplace and can be subsequently put up for NFT sale by the NFT’s owner. Here are the steps to sell NFTs on Polygon:
How to find Polygon NFTs on OpenSea.
Although the OpenSea NFT marketplace runs on the Ethereum blockchain, it allows users to buy, sell or trade NFTs from various other blockchain platforms, namely Solana, Klaytn and Polygon.
On such multichain NFT platforms, Polygon NFTs will have a Polygon logo in the upper-left corner of the representative image used to denote the item. Alternatively, one could filter Polygon from the list of blockchains that the platform supports to see only those NFTs that are hosted on the Polygon network.
With more than 43 million OpenSea Polygon NFTs already listed across categories such as art, collectibles, music, photography, sports, trading cards, utility and domain names, users could also use the range of filters available on the OpenSea platform to narrow down their eventual purchase.
By giving users the choice to browse popular NFT collections or even selecting NFTs that are priced within a defined budget range, the OpenSea marketplace offers an intuitive experience for those looking to buy their first NFT or add to their existing collection.