Kraken-Backed Loan Triggers Liquidation Risk for US-Based Crypto Firm
US-based crypto company USBC has taken on an $18 million Bitcoin-backed loan from Kraken-affiliated entity Payward Interactive. As of July 31, this debt was secured by 479 Bitcoin worth approximately $30.1 million at the time.
The loan agreement requires a minimum margin ratio of 150%, but as long as USBC maintains a 130% call ratio, it can avoid any immediate action from Payward Interactive. However, if the price-dependent risk materializes and the company's collateral value drops below $23.4 million, the lender may issue a collateral-call notice requiring additional collateral or partial repayment within 24 hours.
Things get more serious when the call ratio falls to 120%. At this level, Payward Interactive has sole discretion to liquidate USBC's Bitcoin without any prior notice or warning. In such an event, the company would owe a 1% fee on the collateral-sale proceeds and cover any shortfall after applying excess proceeds.