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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 never lent, staked, or otherwise redeployed.
Custody is handled exclusively through Anchorage Digital, which holds the distinction of being the only federally chartered digital asset bank in the US. That charter was granted in January 2021 by the Office of the Comptroller of the Currency. By parking collateral with a regulated national trust bank rather than keeping it on its own books, Arch creates a structural separation between the entity making loans and the entity holding the assets. That separation of custody and lending functions is something Sahay has repeatedly pointed to as a key differentiator from the firms that failed.
Collateral is sourced from segregated cold-storage wallets, and every transfer requires multi-party verification. The firm also offers what it describes as bankruptcy-remote structures, designed so that client assets wouldn’t be swept into a general creditor pool if the company itself ever ran into trouble.
How the loans actually work
Arch’s lending model is overcollateralized, operating at an initial loan-to-value ratio of up to 60%. In practical terms, if you want to borrow $60,000, you need to post at least $100,000 worth of Bitcoin as collateral. When Bitcoin’s price drops enough to push the LTV to around 70%, margin calls kick in. Borrowers typically get a 24 to 48-hour window to either add more collateral or pay down part of the loan.
The firm also carries a $100 million insurance policy through Lloyd’s of London, with additional coverage options available.
On the regulatory side, Arch operates under NMLS registration #2637200 and holds lending licenses across 44 US states.
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