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Director at Spartan Group, Leeor Groen, noted his delight to back the CLST team after the market situation exposed gaps in the crypto lending industry.
Crypto lender and borrower CLST has completed an oversubscribed seed round, raising $5.3 million, reports suggest. The funding round was led by the Spartan group, a blockchain advisory firm. Also, Coinbase Ventures, Kraken Ventures, TX Ventures, Menai Financial Group, and Luno Expeditions all participated.
CLST touts itself as an institutional gateway for collateralized and uncollateralized loans. Using the funds, it plans to expand its operations and market infrastructure. The firm hopes to make it easier than ever for peer-to-peer lending and borrowing between institutions.
Since its launch earlier in the year, the firm has attracted institutional asset lenders and borrowers who require liquidity and counterparty risk management services. Its client list includes hedge funds, exchanges, treasuries, asset managers, and crypto banks.
Michael Guzik, founder and CEO of CLST, noted that the firm will provide a market for digital assets. It will do this by linking the crypto asset short-term debt market with the traditional financial market.
CLST Capitalizing on Points of Failure in Crypto Lending
Recent downturns in the crypto market exposed the flaws of the crypto debt market. Celsius Network, Voyager Digital, BlockFi, Vauld, and Babel Finance all suffered from unsecured loans. Both Voyager Digital and Celsius Network ended up filing for chapter 11 bankruptcy.
Currently, lenders don’t have information about a borrower’s trading risk. Likewise, borrowers don’t have oversight regarding the safety of their collateral before loan maturity. This gap has prevented institutional-grade platforms from participating in the crypto lending industry.
CLST hopes to bridge the gap and attract institutions. Consequently, it is building a financial data sharing and collateral management platform so that lenders and borrowers can determine just how much risk will be involved in the lending process. The firm plans to automate “bilateral price negotiation and settlement for unsecured and collateralized short-term debt market.”
Director at Spartan Group, Leeor Groen, noted his delight to back the CLST team after the market situation exposed gaps in the crypto lending industry. Also, he said, “It is clear that the crypto industry needs a better way to manage liquidity and counterparty risk as it continues to mature.”
Groen noted that CLST’s platform will facilitate institutional borrowing, lending, and treasury management.