SALT Lending has closed a $64.4 million Series A funding round from a share sale to accredited investors less than three months after its planned sale fell through due to the implosion of centralized crypto exchange FTX. SALT will use the capital toward new products and its growth strategy.
In November, online investing platform Bnk To The Future terminated its planned acquisition of SALT Lending after the latter informed customers it would pause withdrawals and deposits on its platform due to an unspecified exposure to FTX. This new funding was to recapitalize SALT’s balance sheet and capital reserves. Subject to regulatory approval, SALT is working to return to full operations during the first quarter of this year.
“Crypto faced a perfect winter storm in 2022, taking with it significant industry participants like Terraform Labs, Voyager Digital, Celsius Network, Three Arrows Capital, FTX, and BlockFi.
SALT was not immune to these market forces, but we are determined to emerge stronger than ever,” said SALT founder and interim CEO Shawn Owen in a statement. “Despite facing an unprecedented situation and, frankly, an existential threat, we have embarked on a growth plan that we believe positions us for even greater success in the future.”
SALT initially saw a huge opportunity as the bull market of 2021 gave way to a bear market early last year. While the implosions of hedge fund Three Arrows Capital and Celsius put the words crypto lending front and center in a bad way.
However, the FTX collapse that began in early November caught the market – and SALT – off-guard. SALT said it agreed to call off the merger to focus on the problem at hand.
As the FTX contagion spread, SALT decided to “just get out of the market, shut everything down, protect our customers and reassess,” said Owen. The platform wasn’t designed to shut down in that way, and the user base was left spooked. SALT spent the aftermath talking to its base to try and restore confidence.
Asked how crypto lenders can win back nervous customers, Owen said the answer is transparency and providing proof of reserves, noting that his company is raising more money than it otherwise might have in order to build a surplus.