Updates on Unchained’s business and evolution, and steps we are taking to remain a thriving bitcoin-native financial services company.

Turbulent market environment

These past few weeks and months have been an unprecedented time for Unchained and our industry. We’ve watched multiple lenders and exchanges fall under the weight of dangerous leverage, counterparty risks, and losses through third-party custody. It’s noteworthy how so many once high-flying, fast-growing firms have now crumbled.

These outcomes are instructive. They paint a picture of an interdependent system of lenders, exchanges, and custodians, with risky exposures to one another. Instead of secure, hard assets forming the basis of deposits and transactions, users and institutions were trading in account balances, and tokens were often printed out of thin air. These institutions replicated the worst practices of the traditional financial system, only using cryptocurrencies to do everything faster and at huge scales.

Unchained’s differentiation

This all stands in stark contrast to Unchained’s model. Our focus on bitcoin, self-custody, and eliminating or limiting counterparty risk means we find ourselves in an unparalleled position in a market where nearly every other lending institution has fallen. Unchained’s personal, business, and IRA vault clients rest assured that because they own the keys to their bitcoin; their bitcoin are safe, never commingled, and never able to be moved or lost by Unchained. Meanwhile, our lending clients trust that their loan collateral remains segregated on-chain, the bitcoin collateral remains in their legal title, and it cannot be rehypothecated. And our trading clients take advantage of the fastest settlement times when buying bitcoin directly to a multisignature vault with keys they control.

With this foundation, and against the backdrop of the broader market, Unchained is seeing record numbers of new clients, bitcoin deposits, and trading volumes. We have also continued our five-year track record, through multiple cycles and periods of high volatility, of never incurring a loss in our loan portfolio and our aggregate loan book today remains over-collateralized at a 214% collateral-to-principal ratio. As a bitcoin-native financial institution built from the ground up on first principles, Unchained has proven time and time again that it can weather even the choppiest markets. We are proud to be a beacon of education, safety, and security for our clients amidst the current storm—ever focused on our mission of empowering our clients to truly own their wealth.

Despite this track record, funding for bitcoin-backed loans has been materially constrained by the recent market events and their cumulative nature. While we have never had exposure to FTX, Alameda or any other institution who have lost client funds nor have we ever commingled client funds or lent client funds, the state of the present market is a reality with which we have to operate and it is our responsibility to all of our stakeholders to be conservative.

Preparing for the future

Our team has executed well and made the necessary, hard decisions that led us here. While Unchained is well-capitalized and we just recently completed an equity round led by Ten31, we are a financial institution operating in very challenging markets and it is important that we operate for the long term interest of all of our stakeholders including clients, investors and the team given the recent market uncertainty.

In order to ensure Unchained and our clients retain solid footing through the current market, no matter how it develops, we find ourselves having to make another hard decision today: we are reducing our overall workforce by roughly 15%. While this means losing valuable and talented team members, we believe this reduction in expenses materially impacts our chances for long-term success.

Every person on our team cares about our mission and our clients. Myself and other members of the management team are deeply saddened to have to say goodbye to great people. While lots of factors have landed us here, chief among them is making some hires during the bull market that are, unfortunately, not sustainable given current market conditions. As CEO I take full responsibility for the decisions that ultimately necessitated taking this action, and I am sorry to the affected employees and their families.

We are committed to helping departing employees with their transitions with whatever assistance we can provide. We are offering a severance package that includes paying an additional 1-2 months of base pay depending on tenure, paying up to two month’s premium for health care continuation benefits, pro-rating of first year vesting of options and accelerating any bonus options, and extending the option exercise window. 

In addition, we are restructuring our senior leadership team and announcing the transition of two of our executives to new, non-employee roles. Parker Lewis, our Head of Business Development, will be joining the board as a director, which is still subject to certain shareholder approvals that we expect to be completed in December. Will Cole, our Chief Product Officer, will become a senior advisor to the company. In addition to continuing to provide leadership for Unchained in their new roles, both executives will also play an ongoing leadership role in the growth and development of the Bitcoin Commons, further fostering the bitcoin community in Austin.

The road ahead

Unchained remains committed to our mission and principles. We are a successful, forward-thinking company building native financial products for the world’s soundest money. The decisions we’re making now are designed to ensure that we can continue to build and grow to realize our full potential.

The calamities of this year are also educating many about the value of owning your keys and having a financial partner such as Unchained. This month, despite all the turmoil, has been one of Unchained’s most successful months ever. We will continue our focus on educating individuals and businesses about the benefits of collaborative custody as the market continues to move toward us.

We have exciting plans in store for 2023 that include major enhancements to the core product experience, additional financial service offerings, and new, value-adding partnerships.



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Joe Kelly

Joe Kelly

CEO and Co-Founder, Unchained Capital