Kraken affiliate can liquidate 479 BTC if price hits $45,094

Payward Interactive, a Kraken affiliate, has the right to immediately liquidate 479 Bitcoin pledged by USBC if Bitcoin falls to an illustrative price near $45,094, the company disclosed in its July 31 Form 10-Q.

USBC drew a fourth tranche of $3 million on July 28, bringing the outstanding principal under the Payward Interactive facility to $18 million. As of the July 31 inputs in the filing, USBC had pledged 479 Bitcoin recorded at about $30.1 million against that $18 million loan. The filing shows a loan-to-value ratio of 59.8% based on those figures.

The facility requires an initial margin ratio of 150%. If collateral coverage falls to 130%, the lender may issue a collateral-call notice that requires additional collateral or partial repayment within 24 hours. Using the July 31 snapshot, that 130% call level implies an illustrative Bitcoin price near $48,852.

If coverage declines to 120%, the lender can liquidate collateral immediately without issuing a notice or waiting for a cure period. The July 31 inputs translate that 120% liquidation threshold into an illustrative price of about $45,094 per Bitcoin.

Those illustrative price points are based on the filing’s snapshot of principal, pledged Bitcoin and no change in accrued fees. The loan agreement uses an applicable spot-reference price and allows the lender to include accrued and unpaid fees when calculating the balance, so trigger levels can shift with market prices, fee accruals, repayments or additional collateral.

Payward Financial, branded Kraken Financial, holds the Bitcoin in custody for the lender. If Payward exercises immediate liquidation at the 120% level, the agreement permits a fee equal to 1% of collateral-sale proceeds. Any shortfall after sale proceeds are applied would remain USBC’s responsibility, while any excess would be returned to USBC.

USBC reported that no collateral call, mandatory repayment or liquidation had occurred as of July 31. The filing shows the loan carries an annual interest rate of 8.5% and, based on the $18 million outstanding at the filing date, would mature on July 28, 2027 unless repaid earlier. USBC reported $2.982 million in cash and cash equivalents at June 30.

USBC disclosed a first-half net loss of $46.3 million, which included $29.7 million of unrealized losses on digital assets, $11.2 million of stock-based compensation and a $2.5 million credit-loss provision. A $12 million non-cash deferred tax benefit partly offset those items. The company reported that loan proceeds were being used primarily to develop a tokenized-deposit offering and to pay related costs to affiliate Vast Holdings.

The filing updates exposure disclosed in June, when USBC reported a $15 million balance secured by 336 Bitcoin. The July draw and the additional pledged Bitcoin increased both encumbered collateral and outstanding debt, altering the price levels at which collateral calls and immediate liquidation could be triggered.