Arch Lending cofounder discusses crypto lending safeguards post-Celsius collapse

When Celsius Network filed for bankruptcy in July 2022, it took roughly $4.7 billion in customer deposits down with it. Now, a cohort of lenders that launched in the shadow of that disaster is making the case that crypto-backed borrowing can work, provided you build it with the opposite playbook of the firms that blew up. Arch Lending, co-founded by Himanshu Sahay and Dhruv Patel in February 2022, sits squarely in that camp. The firm has originated more than $350 million in loans with no reported client losses, a track record that rests on a set of structural choices designed to prevent precisely the kind of cascading failure that defined 2022’s crypto credit crisis. The anti-Celsius playbook The core problem with Celsius, Voyager, and BlockFi wasn’t that they offered crypto lending. It was how they managed the assets behind those loans. Celsius famously rehypothecated customer deposits, meaning it took the crypto clients deposited and lent it out again, staked it, or used it as collateral for the firm’s own trades. When markets turned, there wasn’t enough left to make everyone whole. Arch Lending’s answer to this is blunt: a strict zero-rehypothecation policy. Client collateral is...