Rehypothecation

Rehypothecation is the practice of a lender using collateral posted by a borrower as collateral for the lender's own financing or trading activities. In crypto, it means a firm could take your pledged Bitcoin and lend it out or use it to back their own positions.

The 2022 crypto lending collapses (Celsius, BlockFi) were largely rehypothecation failures: when counterparties defaulted, customer collateral was gone. Strong lenders disclose no-rehypothecation policies and use qualified custodians that segregate client assets.

Why it matters for Milo customers

Milo does not rehypothecate. Pledged Bitcoin and Ethereum stay in segregated custody at Coinbase or BitGo and are never lent out, traded, or reused. When the loan is repaid, the same crypto comes back.

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