MicroStrategy Denies Receiving Collateral Calls Against Bitcoin-Backed Loan

Aggressive bitcoin investor and American software firm MicroStrategy said Wednesday that it has not received a margin call against the $205 million bitcoin-backed loan it received in March, according to a Reuters report.

A margin call is a situation where an investor has to commit more funds to avoid loss on a trade with borrowed cash. CNBC reported on Tuesday that investors are concerned that MicroStrategy, which has bet $4 billion on Bitcoin, will have to liquidate some of its Bitcoin holdings if it faces a margin call. MicroStrategy did not respond to CNBC's request for comment prior to the publication of this report. The world's largest cryptocurrency fell below $21,000 on Tuesday in this week's big sell-off. Shares of MicroStrategy, considered by some as a proxy for investing in bitcoin, have dropped more than 70% since the start of the year. Bitcoin was trading at $21,184.99 at 12.52 ET on Wednesday. In March, MicroStrategy borrowed $205 million on a three-year loan from crypto-focused bank Silvergate to buy more bitcoins using its own bitcoin assets to secure the loan. As of March 31, MicroStrategy had 129,218 bitcoins bought at an average price of $30,700 each, according to a company filing. The company is bitcoin's largest institutional investor. MicroStrategy's finance director had previously emphasized in May that if bitcoin fell below $21,000, it could trigger a margin call. "MicroStrategy has not received a 'margin call' against our Silvergate loan, even as bitcoin prices have fluctuated recently," the company said in an emailed statement to Reuters. MicroStrategy states, “We can always contribute additional bitcoins to maintain the required loan-to-value ratio… The loan-to-value ratio is a measure of how risky a loan is by comparing the borrowed amount to the value of the asset. Earlier in June, MicroStrategy CEO Michael Saylor said that the company has more than enough Bitcoin to meet its loan requirements. He said bitcoin prices must drop below $3,500 before more collateral is needed. Saylor also said in a tweet on Tuesday that the company expects market fluctuation and has structured its balance sheet to stay invested. MicroStrategy did not immediately respond to CNBC's request for a comment.