In an announcement on March 10, Figure Technologies – which claims to be the industry’s first fintech to bring lending to the blockchain – said loan applications with the firm had soared by 300% since the Fed’s action.
A blockchain lending firm has seen the value of total loans funded surge to $1 billion since the United States Federal Reserve announced its emergency stimulus interest rate cut last week.
Since its launch in 2018, Figure Technologies has used its blockchain, Provenance, to process consumer loans; one year on, the firm claims it was originating $85 million of loans per month for itself and other major lenders.
Unprecedented low interest rates
In December 2019, it went on to seal over $100 million in a Series C funding round led by Morgan Creek Digital, with participation from Mitsubishi UFJ Financial Group’s venture capital arm, MUFG Innovation Partners.
Among its blockchain-based lending solutions, Figure Technologies issues 5-minute home equity lines of credit (HELOCs), in which the borrower uses his or her house as collateral for the loan.
Mike Cagney, the firm’s co-founder and CEO, says the platform being built on the Provenance blockchain was crucial to support the growth and innovation of such lending products. As central banks worldwide move to lower rates in a bid to offset the economic impact of coronavirus, Cagney said:
“The 300 percent increase in applications suggests consumers are eager to take advantage of unprecedented lower rates across mortgages, HELOCs and student loan refinancing.”
The firm has indicated that the average size of loans issued in the recent lending surge was roughly $50,000 per household.
Cagney has said that new blockchain-based solutions will be rolled out tied to these lower rates “in the near future.”
Market SOS
As reported earlier today, the Bank of England (BoE) has cut interest rates by 0.5% – the most since 2009 – in direct response to economic pressure posed by the coronavirus outbreak.
With traditional markets floundering amid the health crisis, Bitcoin too has faced losses. One commentator, the creator of Bollinger Bands trading indicator, John Bollinger, remarked:
“Bitcoin fell victim to the COVID-19 panic. I truly did not see that coming, I thought it might act as a safe haven asset.”
Safe-haven status, he added, remains “entirely psychological” – “a matter of perception, not fact.”
Blockchain Firm Veritaseum Calls for Assets to Be Unfrozen in SEC Response
The Veritaseum blockchain platform and its founder Reggie Middleton have filed a response to the U.S. Securities and Exchange Commission (SEC) over the regulator’s claim that its ICO was fraudulent and illegal, and that Middleton had later manipulated the VERI token’s value.
As a result, the SEC managed to get a New York court last week to temporarily freeze the assets of the project – which describes itself as a “gateway to peer-to-peer capital markets” – pending further discovery in the case.
Middleton stands accused by the SEC of spreading false information about his businesses,and conducting trades in the open market that hiked the price of the VERI token. The SEC further alleged he misappropriated over $520,000 of investor funds for his personal use, as well as $600,000 to purchase precious metals to fund another alleged scam.
The founder had failed to register the ICO with the SEC, the commission said. The SEC also disagreed with Middleton’s claim the tokens were not securities.
Veritaseum’s lengthy, 423 page response sets out its argument that the project had in fact issued “utility tokens”, not securities, that were to provide holders with access to research reports and later access to its “software platform.”
The document states:
“The tokens are not investments and are not securities. They do not represent an ownership interest in Veritaseum or its assets; do not give holders any right to share in the company’s profits; do not confer voting rights; and do not pay dividends or interest. Numerous token holders have used their tokens to avail themselves of the Veritaseum’s unique products and services, which the company has continually expanded and improved.”
The SEC had also justified the assets freeze on the claim that Middleton had begun transferring over $2 million-worth of investors’ ether funds to “other digital asset addresses”, and his personal account soon after the agency had informed Middleton’s lawyers of the coming enforcement action.
The firm’s response hits back at this claim, saying that its legal team had already “demonstrated” to the SEC that the asset transfer was “routine funding of Veritaseum’s ongoing lawful business operations and was consistent with the company’s prior funding practices.”
“The SEC did not disclose this information to the Court in its asset freeze application and incorrectly represented to the Court that Mr. Middleton had transferred a portion of the assets to a personal account. In fact, all of the assets remained in the company’s control”, according to Veritaseum.
The firm further set out that the assets freeze goes against the very purpose of the SEC and is harming investors.
The firm called for the court to “lift the freeze in its entirety”, continuing:
“The Second Circuit has instructed district courts to give careful attention where an SEC asset freeze might financially destroy a defendant’s company and thereby thwart the goal of protecting investors. … The temporary freeze in this case has already caused significant harm to the holders of Veritaseum’s utility tokens, the very people the SEC is purportedly seeking to protect.
It further claims that the SEC provided “no evidence that Middleton has dissipated or concealed company assets or is likely to do so in the future.”
