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MicroStrategy denies that they have received a margin call against Silvergate loans




The software company MicroStrategy has not received a margin request for its loan from the crypto-focused bank Silvergate, Reuters reported on Wednesday.

Valerie Plesch | Bloomberg | Getty pictures

The aggressive bitcoin investor and US software company MicroStrategy says it has not received a margin call for a $ 205 million bitcoin-backed loan it took in March, according to a Reuters report on Wednesday.

A margin call is a situation where an investor must commit to more funds to avoid losses on a trade made with borrowed cash.

CNBC reported on Tuesday that investors were worried that MicroStrategy, which has invested $ 4 billion in bitcoin, would be forced to liquidate some of its bitcoin holdings if faced with a margin requirement.

MicroStrategy did not respond to a CNBC request for comment prior to the publication of that report.

The world̵[ads1]7;s largest cryptocurrency plunged briefly below $ 21,000 on Tuesday in this week’s big sale. Shares in MicroStrategy, which is considered by some to be a proxy for investing in bitcoin, have fallen more than 70% since the beginning of the year.

Bitcoin was traded at $ 21,184.99 at 12.52 ET on Wednesday.

In March, MicroStrategy borrowed $ 205 million in a three-year loan from the cryptocurrency-focused bank Silvergate to buy more bitcoin, using its own bitcoin holdings to secure the loan.

As of March 31, MicroStrategy held 129,218 bitcoins, each purchased at an average price of $ 30,700, according to a company file. The company is the largest corporate investor of bitcoin.

MicroStrategy’s CFO highlighted earlier in May that if bitcoin were to fall below $ 21,000, it could trigger a margin call.

“MicroStrategy has not received a” margin call “against our Silvergate loan, although bitcoin prices have fluctuated recently, the company told Reuters in an email.

Read more about technology and crypto from CNBC Pro

“We can always contribute additional bitcoins to maintain the required loan-to-value ratio … even at current rates, we continue to maintain more than enough extra unsecured bitcoins to meet our requirements under the loan agreement,” said MicroStrategy . The loan-to-value ratio is a measure of how risky a loan is, by comparing the amount borrowed with the value of the asset.

Earlier in June, MicroStrategy CEO Michael Saylor said the company has more than enough bitcoin to meet its borrowing needs. He said bitcoin prices had to fall below $ 3,500 before more security would be needed.

Saylor also said in a tweet Tuesday that the company anticipated volatility and structured the balance sheet so that it could remain invested.

MicroStrategy did not immediately respond to a Wednesday request for comment from CNBC.

– CNBC’s Ryan Browne contributed to this report.





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