2022 is far from being a good year for Crypto.com. The cryptocurrency exchange had indeed started the year with a hack of over $34 million in Bitcoin and Ether. Another news is now shaking some users of the platform. The latter must indeed pay back their crypto loans by mid-March 2022, and we can’t say that Crypto.com leaves them much choice.
Repayment or liquidation: crypto.com imposes a deadline for its crypto loans
Crypto.com has sent an email to its users affected by restrictions related to its loan program, informing them that they have until March 15, 2022 to repay their cryptocurrency loans. The list of countries affected by the restrictions has been updated to include the United States, the United Kingdom and 38 other countries.
The collateral of users who do not repay their loans by this deadline imposed by the platform, will simply be liquidated. The affected loans will be closed by Crypto.com.
How to explain this decision of the exchange, which penalizes its users? Some of Crypto.com’s customers believe that the company is suffering from a financial point of view, the backlash of its significant marketing efforts.
The year 2021 has indeed been marked for Crypto.com, by its prestigious partnerships with sports giants, collaborations that amount to tens of millions of dollars. However, Crypto.com has not raised as much money as other unicorns, which raises questions about the company’s ability to finance all its ambitions.
Crypto.com is giving its users until mid-March to repay their crypto loans.
“Better safe than sorry”
These theories obviously do not reflect, necessarily the reality. This decision by Crypto.com regarding the repayment of cryptocurrency loans could also be motivated by reasons that are in no way related to its financial situation.
One should also consider the regulatory environment for crypto loans. Cryptocurrency loan products have been in the crosshairs of regulators for over a year. For example, the U.S. SEC investigated Gemini and Celsius’ lending products in January 2022.
In February 2022, BlockFi was fined $100 million for unregistered crypto lending products.
So it could be that Crypto.com simply decided to take these steps to end its crypto lending program in countries where regulation is particularly fussy about this type of product, in order to avoid dealing with disputes with regulators.
The SEC had successfully dissuaded Coinbase from launching its Lend program. Has this admission of weakness by the exchange in the face of the regulator left a deep impression on the minds of the leaders of the other exchanges, to the point that the cryptocurrency exchanges now want to avoid entering into a war on this field at all costs?