San Francisco-based lender Divine Research has issued around 30,000 unbacked short-term crypto loans since December, using OpenAI CEO Sam Altman’s iris-scanning platform World ID to verify borrowers.

Divine offers loans under $1,000 in the USDC (USDC) stablecoin, mainly to overseas borrowers underserved by traditional finance. It uses World ID to ensure users cannot open multiple accounts after defaulting.

“We’re loaning to average folks like high-school teachers, fruit vendors . . . basically anyone with access to the internet can get access to our funds,” Divine founder Diego Estevez told the Financial Times. “This is microfinance on steroids.”

Interest rates range from 20% to 30%, with a reported first-loan default rate of around 40%. “High interest rates compensate for these losses,” Estevez said, adding that free World tokens issued to borrowers can be “partially” reclaimed.

Related: Fees, collateral give DeFi edge as TradFi eyes crypto loans

Everyday investors can earn by funding high-risk crypto loans

Estevez said Divine’s lenders are everyday individuals seeking solid returns. “Anyone can provide liquidity. We’ve engineered the system such that after accounting for default rates and the [interest] rates on offer, providers will always make a profit.”

Divine is part of a growing group of high-risk crypto lenders capitalizing on renewed market momentum and political tailwinds, including support from former US President Donald Trump.

Another startup, 3Jane, recently raised $5.2 million from Paradigm and offers uncollateralized credit lines on Ethereum. Unlike Divine, 3Jane requires “verifiable proofs” of assets or income, but still no collateral.

3Jane plans to introduce AI agents that follow lending rules automatically, aiming to lower rates while enforcing repayment. Defaulted loans on its platform are sold to US debt collectors.

Other players like Wildcat cater to market makers and trading firms, offering undercollateralized loans with customizable terms. According to Wildcat adviser Evgeny Gaevoy, “In the event of a default, lenders co-ordinate directly among themselves to seek recourse.”

Related: Fintech firms will move to DeFi lending within 3 years

Crypto lending gains traction

Lending remains a small slice of the crypto market but attracts growing attention as institutional players reenter the space. Last week, reports revealed that JPMorgan Chase is looking into crypto-backed loans, planning to lend directly against crypto assets like Bitcoin (BTC) and Ether (ETH).

However, the shadow of 2022 looms large, when major crypto lenders like Celsius and Genesis collapsed. Celsius’s CEO Alex Mashinsky was sentenced to 12 years for fraud, and Genesis settled a $2 billion lawsuit.

Magazine: Will Robinhood’s tokenized stocks REALLY take over the world? Pros and cons

]]> https://earlybirdsinvest.com/divine-research-issues-unbacked-crypto-loans-using-sam-altmans-world-id/feed/ 0 49942 https://earlybirdsinvest.com/jpmorgan-chase-citi-and-wells-fargo-lose-5361000000-to-bad-loans-in-one-quarter-as-customers-fail-to-pay-debt/ https://earlybirdsinvest.com/jpmorgan-chase-citi-and-wells-fargo-lose-5361000000-to-bad-loans-in-one-quarter-as-customers-fail-to-pay-debt/#respond Sat, 19 Jul 2025 09:02:45 +0000 https://earlybirdsinvest.com/jpmorgan-chase-citi-and-wells-fargo-lose-5361000000-to-bad-loans-in-one-quarter-as-customers-fail-to-pay-debt/

JPMorgan Chase, Citi and Wells Fargo say they’ve lost $5.361 billion from customers who can no longer pay their debt.

In their Q2 2025 earnings reports, the three major banks disclosed billions of dollars in losses from “net charge-offs” — loans written off as uncollectible after all efforts to recover payments proved unsuccessful.

Among the trio, JPMorgan Chase reported the highest level of charge-offs at $2.4 billion, predominantly driven by bad credit card debt.

Meanwhile, Citi wiped $2.234 billion in bad loans off its books, including $1.889 billion tied to its retail credit card portfolio.

And Wells Fargo recorded $977 million in net charge-offs, fueled by $818 million in sour loans from its consumer banking and lending segment.

The figures come as fresh data from the Federal Reserve Bank of New York shows that US credit card balances reached $1.18 trillion by the end of March 2025.

Despite the losses, Citi reported a $225 million decline in net credit losses quarter-over-quarter, and Wells Fargo saw a $12 million decrease in net charge-offs over the same period. However, JPMorgan witnessed an increase of at $179 million in net charge-offs over the three-month period.

Additionally, the three banks reported strong earnings in Q2, with JPMorgan, Citi and Wells Fargo generating $15 billion, $4 billion and $5.5 billion in net income, respectively.

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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any losses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

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At the 2025 Bitcoin Conference in Las Vegas, Strike founder and CEO Jack Mullers announced a new system of Bitcoin back loans on Strike at single-digit interest rates.

Jack Mullers began his keynote speech by pointing out the biggest problem. Fiat currency.

“The best time to go to Whole Foods and buy eggs with your dollars was in 1913,” Mullers said. “Then you’re screwed.”

What is the solution?

“The solution is Bitcoin,” Mullers said. “Bitcoin is money that matches what no one can print. You cannot print. You cannot deny my time and energy. You cannot take me of owning assets, getting debts, living sovereignly, protecting my family, my priced possessions. Bitcoin is something we were invented to do that.”

Maraz gave the audience a power message by explaining that people should embrace every dollar they have in Bitcoin. People should also spend a little bit of it to lead a lovely life.

“You can’t huddle forever,” Jack said.

While people are talking about loans they borrow against Bitcoin. He explained why banks that place 20% interest on Bitcoin-backed loans are ridiculous.

“All these professional economists, they’re like Bitcoin is dangerous and unstable,” Mullers said. “No, not. This is an epic seven-year volatility, and the orange one in the middle is Bitcoin. It’s riskless and not volatile. It’s a little more volatile than an apple, but much less volatile than a Tesla.”

“As Bitcoin matures, its volatility decreases,” Jack continued. “Bitcoin’s volatility is at a point where it’s less dangerous than Tesla stocks. You shouldn’t pay double-digit fees for your loan.”

The Mallers have announced his new loan system with a strike of 9-13% on interest rates. This allows people to get $10,000 to $1 billion in loans.

“Take responsibility. This is a debt. In my opinion, debt is like a fire. It can warm civilization. It can warm a home, but if you go crazy, it can burn your home.”

“Life is short,” Jack said. “I travel, but with Bitcoin, I can take something better.”

Wall Street financial firm Cantor Fitzgerald has closed its first Bitcoin lending deal nearly a year after announcing its crypto lending services.

According to a May 27 Bloomberg report, Cantor provided Bitcoin-backed loans to FalconX and Maple Finance. FalconX, a digital asset broker, said it secured a facility worth over $100 million as part of a “broader credit framework,” while Maple Finance reportedly closed the first tranche of an agreement with Cantor.

The service allows companies holding Bitcoin to borrow funds and use the cryptocurrency as collateral, providing a way to unlock liquidity without selling their BTC holdings. Cantor announced its Bitcoin financing business with an initial capital of $2 billion in July 2024, targeting institutional investors seeking to leverage their Bitcoin. At the time, the company said Anchorage Digital and Copper would serve as custodians and collateral managers in the venture.

Credit markets are a fundamental part of the financial system, allowing capital to flow between borrowers and lenders and supporting economic activity across sectors. Their central role also means they can contribute to financial distress when risks are mismanaged. While mirroring some functions of traditional finance, crypto credit markets have been operating with less regulatory oversight.

Digital asset crisis of 2022

This dynamic was evident during the 2022 crisis in the digital asset sector. Celsius Network, once a leading crypto lending platform, collapsed after engaging in risky financial practices and facing allegations of fraud. Similarly, BlockFi filed for Chapter 11 bankruptcy in November 2022 following significant exposure to the collapse of crypto exchange FTX.

According to a report from Galaxy, the total crypto lending market, including crypto-backed collateralized debt positions (CDPs) tied to stablecoins, stood at $36.5 billion in the last quarter of 2024, marking a 43% decline from its all-time high of $64.4 billion in 2021. Despite the broader contraction, onchain lending platforms have seen a dramatic rebound, with open borrowed positions surging to $19.1 billion by Q4 2024, a 959% increase over two years.

Cantor’s crypto arm

Cantor is one of the most traditional financial services companies in the United States. Founded in 1945, it offers a range of services for institutions, including investment banking, brokerage, equity and fixed-income sales and trading. The company claims to serve over 5,000 clients across 20 countries.

The company’s CEO, Howard Lutnick, has been an advocate for classifying Bitcoin as a commodity, akin to gold and oil, and has called for clearer regulatory frameworks for cryptocurrencies in the US. Lutnick was also appointed to co-lead US President Donald Trump’s transition team in 2024.

Cantor is also one of the managers of Tether’s US Treasury securities portfolio backing its stablecoin. In early 2024, the firm acquired a 5% stake in Tether.

Magazine: Unstablecoins: Depegging, bank runs and other risks loom

US authorities arrested an Atlanta man this week on charges related to his alleged connection to a COVID-19 relief loan application fraud ring.

The Department of Justice (DOJ) alleges that Ian Patrick Jackson, 37, conspired with another Atlanta man to recruit at least nine business owners to submit fraudulent Paycheck Protection Program (PPP) loan applications using fake tax documents.

Jackson allegedly told the business owners to falsely claim they each employed 16 individuals and paid monthly wages of $120,000. The DOJ says the owners then wrote falsified payroll checks to people who didn’t work for them and then either kept the money for themselves or paid Jackson via his co-conspirator.

Jackson is allegedly connected to 15 fraudulent COVID-19 relief loan applications that inked $3.39 million in proceeds. He’s the 12th person to be charged in connection with an Atlanta-based PPP fraud ring, with the 11 previous defendants having already pled guilty or been convicted at trial. The DOJ says authorities have recovered nearly $1.2 million of the defrauded funds.

Jackson also allegedly applied for a separate $237,500 PPP loan using fabricated tax forms and used a forged driver’s license and false revenue statements to fraudulently apply for approximately $100,000 in PPP and Economic Injury Disaster Loan (EIDL) program loans. The DOJ also says he fraudulently secured another $240,035 PPP loan and $125,000 in EIDL program loans and grants on behalf of another company.

Jackson has been charged with conspiracy to commit bank fraud, two counts of bank fraud, two counts of wire fraud and two counts of money laundering. The charges could result in decades in prison.

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Bitcoin holders are becoming more comfortable borrowing against their crypto as market confidence grows, according to Seamus Rocca, the CEO of the Gibraltar-based private bank Xapo Bank. 

In an interview at the Token2049 event in Dubai, Rocca told Cointelegraph that with Bitcoin (BTC) hovering around $95,000 and institutional adoption starting to catch on, the executive said the mood among investors shifted from short-term speculation to a more long-term outlook. 

“I’m not sure that confidence would have been there three or four years ago,” Rocca told Cointelegraph. “But today, people are more comfortable to borrow against Bitcoin because we’re nowhere near the levels that would trigger liquidation.”

On March 18, Xapo Bank launched a lending product that allows users to borrow US dollars using their Bitcoin as collateral. With the product, qualified clients can access up to $1 million in loans while keeping their BTC.

Bitcoin-backed loans are an “obvious” next step

Rocca told Cointelegraph that the growing confidence in crypto’s long-term trajectory fueled the demand for the product. This was driven by developments signaling broader institutional adoption. 

“Expectations are for institutional space coming in, the ETFs, and the mood music on Bitcoin is much more about wider adoption and long-term thinking than very short-term speculation,” Rocca said. 

He said this shift is the key to unlocking demand for borrowing against BTC, as investors feel more secure and feel that sharp price drops are less likely to happen. 

The Xapo Bank CEO said that its Bitcoin-backed loans offer loan-to-value (LTV) ratios of 20%, 30% and 40%, giving borrowers flexibility while managing risk. “If you get a 20% LTV loan and you have 100 Bitcoin, as a lot of early adopters do, that’s still a couple of million dollars you can borrow without having to sell them,” Rocca said. 

With conservative LTV levels like 20%, Bitcoin needs to fall below $40,000 for borrowers to get liquidated. “We’re nowhere near $40,000,” Rocca told Cointelegraph, pointing to the current price stability as a reason for growing borrower confidence.

Related: Blockchains ready for institutions, lawyers hesitate: DoubleZero CEO

Borrowing helps investors avoid selling in emergencies

Rocca said Bitcoin-backed loans provide a solution for holders who want to stay exposed to BTC when facing life’s unexpected expenses. “If you follow the ethos of investing, the smart thing to do would be not to sell it in three days if it goes to $100,000,” Rocca said.

“But life gets in the way,” Rocca added. He told Cointelegraph that unexpected costs, like medical bills or replacing a car, often force investors to liquidate assets at unfavorable times. Rocca said that instead of selling Bitcoin for a $10,000 expense, investors could borrow against their holdings while simply paying interest on the loan.

“You continue to have the upside potential of the price appreciation of the Bitcoin because you haven’t sold it,” he said. “But you get liquidity to pay for things that you need in everyday life.”

With institutional adoption deepening and the Bitcoin market maturing, the Xapo Bank executive is betting that more long-term holders will be ready to tap into crypto liquidity without selling their BTC. This marks a shift from just the “hodl” culture to an age where Bitcoin owners can do more with the asset. 

Magazine: 12 minutes of nail-biting tension when Ethereum’s Pectra fork goes live

]]> https://earlybirdsinvest.com/bitcoin-backed-loans-obvious-next-step-xapo-bank-ceo/feed/ 0 34879 https://earlybirdsinvest.com/fca-eyes-ban-on-credit-and-loans-for-retail-crypto-purchases/ https://earlybirdsinvest.com/fca-eyes-ban-on-credit-and-loans-for-retail-crypto-purchases/#respond Fri, 02 May 2025 20:43:53 +0000 https://earlybirdsinvest.com/fca-eyes-ban-on-credit-and-loans-for-retail-crypto-purchases/

The UK’s Financial Conduct Authority (FCA) is planning new rules that would stop regular investors from using borrowed money to buy cryptocurrencies.

David Geale, the FCA’s executive director for payments and digital finance, reportedly stated that while crypto could offer new opportunities for the UK, the industry must have proper protections.

He added that the FCA is not against crypto but sees it as a high-risk area where consumers need more safeguards.

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On May 2, the FCA asked for public feedback on crypto regulation. In its consultation, the regulator said it is considering a rule to stop companies from allowing customers to buy crypto with credit.

The FCA aims to apply stricter standards to services aimed at everyday investors compared to those serving professional clients. According to Geale, the goal is to create a safe and competitive environment that also attracts responsible businesses to the UK.

One major reason for banning credit-based crypto purchases is the risk of people taking on debt they cannot repay if the value of their crypto drops. FCA research from 2024 found that 72% of crypto users use their own money to invest. However, purchases using credit have increased from 6% in 2022 to 14% in 2024.

Other possible rules include stopping regular investors from using crypto lending and borrowing services. Exchanges may be required to treat all trades equally, clearly report pricing and trade execution, and separate their own trading from customer trading. Paying intermediaries for sending orders could be banned. Staking services might have to cover losses caused by third parties.

Recently, the European Union confirmed plans to introduce strict anti-money laundering rules. What do the rules entail? Read the full story.

Having completed a Master’s degree in Economics, Politics, and Cultures of the East Asia region, Aaron has written scientific papers analyzing the differences between Western and Collective forms of capitalism in the post-World War II era.
With close to a decade of experience in the FinTech industry, Aaron understands all of the biggest issues and struggles that crypto enthusiasts face. He’s a passionate analyst who is concerned with data-driven and fact-based content, as well as that which speaks to both Web3 natives and industry newcomers.
Aaron is the go-to person for everything and anything related to digital currencies. With a huge passion for blockchain & Web3 education, Aaron strives to transform the space as we know it, and make it more approachable to complete beginners.
Aaron has been quoted by multiple established outlets, and is a published author himself. Even during his free time, he enjoys researching the market trends, and looking for the next supernova.

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On-chain data shows that Ethereum’s continued price slide has pushed hundreds of millions in leveraged DeFi positions to the edge of liquidation.

According to data from the DeFi analytics platform DefiLlama, around $319.8 million in Ethereum-based loans are just 20% away from their liquidation threshold.

Most of these at-risk positions are concentrated in leading DeFi lending platforms, particularly MakerDAO and Compound.

The data shows that if Ethereum dips below $1,800 and approaches the $1,750 level, roughly $246 million worth of collateral could be liquidated.

MakerDAO alone accounts for around $229 million of the total, while Compound users could lose approximately $17 million.

Based on CryptoSlate’s data, ETH was trading at $1,872 as of press time

A 19% drop from this level would push the asset into the danger zone, potentially triggering a liquidation cascade. Such a scenario would not only impact borrowers but could also send shockwaves across the broader DeFi ecosystem.

A liquidation cascade happens when falling prices force mass liquidations, which in turn fuel further declines and trigger more liquidations. This domino effect can lead to rapid sell-offs and increase market instability.

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Xapo Bank is the latest in a string of financial institutions that have introduced Bitcoin-backed loans for its customers. This is yet another good indication that the world is warming towards accepting cryptocurrency as a genuine asset.

A Bitcoin-backed loan provides access to US dollars without having to sell your $BTC. This means that Xapo Bank customers can now borrow up to 40% of their $BTC collateral for a maximum loan amount of $1M.

That’s with zero fees. However, Xapo Bitcoin-backed loans are subject to eligibility and a variable interest rate that’s linked to US Federal Reserve rates. And loans aren’t available to customers who reside in the UK or Australia.

According to the bank, the loan will be accessible within a minute of being approved and can be used via debit cards, bank, or crypto transfers. There’s no set schedule for repayments nor penalties for early repayments. But loans must be repaid within the agreed-upon 30, 90, 180, or 365 days.

Is the Xapo Loan an Indication of Improved Market Sentiment?

It could well be. In fact, an HTF Market Intelligence report expects the $8.58B global Bitcoin loan market to grow at a CAGR of 26.4%. At that rate, the market will be worth $45.27B by 2029. And Xapo Bank isn’t the first institution to offer Bitcoin-backed loans.

Coinbase, for instance, introduced Bitcoin-backed loans in November 2021. Amid the 2023 market downturn, however, Coinbase stopped issuing them, citing changing customer demands.

However, around the time of $BTC’s all-time high price of $109, Coinbase reintroduced Bitcoin-backed loans. The CEX now offers $USDC loans powered by Morpho, which is an open-source lending protocol on Base – Coinbase’s Layer 2 blockchain.

Coinbase has also hinted at adding some of the best altcoins to its loan offering. However, the jury is still out on whether that would include leading meme coins.

In all, the fact that banks and exchanges are offering Bitcoin-backed loans reflects a positive market sentiment in terms of Bitcoin and a global acceptance of $BTC as a legitimate asset.

Do Bitcoin-Backed Loans Mean Using a Custodial Wallet?

Yes. You need to be a Xapo Bank customer, and that means using the company’s wallet.

In fact, this Gibraltar-based bank was established in 2013 as a custodial Bitcoin wallet. It has since evolved into a licensed digital banking group. Its wallet is still custodial, though. In other words, Xapo Bank customers’ wallets are regulated by the bank.

That’s not necessarily a bad thing. It means the wallet has bank-grade protection. At the end of the day, though, it’s better to have your own non-custodial wallet, like the Best Wallet app, for complete ownership of your private keys.

The exchange or bank behind a custodial wallet holds your private keys on its server, making your private keys vulnerable to data breaches, meaning your crypto could end up in the wrong hands.

Don’t forget hackers love attacking crypto banks and exchanges, as ByBit will tell you — and a recent Chainanalysis report notes that ‘Private key compromises accounted for the largest share of stolen crypto in 2024, at 44%.’

Here’s another thing to keep in mind. If you take out a Bitcoin-backed loan from Xapo Bank, you won’t be able to access the $BTC you used as collateral. It’ll be held in the bank’s Bitcoin Vault until your loan is fully repaid.

How the Best Wallet Token ($BEST) Ups the Ante

The Best Wallet app is a fully self-custodial, no KYC, multi-chain, multi-currency wallet. It’s also the only crypto wallet that lets you buy the best presale tokens. And now, in a move to capture 40% of the explosive crypto wallet market by end-2026, it has launched its native Best Wallet Token ($BEST).

Analysts forecast that the crypto wallet market will expand at a 24.8% CAGR by 2032. With the general trend leaning towards software wallets, Best Wallet plans to dominate the market. And it will use the Best Wallet Token to complete its mission.

This top non-custodial wallet seems to be well on track to reaching its target with its 50% monthly user growth rate.

The $BEST token presale is also proving highly successful. After raising $160K within 24 hours of the presale launch, the total kitty now stands at $11M+. At the moment, 1 $BEST costs just $0.0244.

But as with any investment, we urge you to DYOR. The Best Wallet Token whitepaper is a good starting point. And if you decide that $BEST is best for you, we recommend reading our full guide to buying the Best Wallet Token.

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