Crypto loans: three offers compared line by line
Ilia Zavialov: crypto loans in the UK, protocol, platform and bait offer on the same test
English version for the United Kingdom.
Ilia Zavialov, a digital security consultant, has a simple way to size up a loan secured on cryptoassets: set three offers next to each other and hold them to the same questions. The test case is a £3,200 loan against coins worth £8,000, taken from an open protocol, from a centralised platform and from a bait offer that turned up on social media. For each one the loan-to-value, the price at which collateral is sold and the final sum are worked out in pounds, alongside the FCA's new lending rules and what to do through Report Fraud.
01Ilia Zavialov: one loan, three offers, the same questions
Picture a holder with £8,000 of coins who would rather keep them and needs £3,200 for a bill. Three lenders are happy to help, each paying out stablecoins and keeping the coins as security.
One is an open protocol: code on a blockchain, no staff, rules written into the contract. One is a centralised platform with an app, terms and conditions and a help desk. The third is a message from a so-called loan adviser who promises a decision in five minutes with no credit search.
Ilia Zavialov asks the same five things of each before looking at any reviews. Where the collateral will be held. How the debt is calculated. The price at which the collateral is sold. What happens if the lender collapses. What has to be paid before funds arrive. Laid out in one grid, the answers make the gaps obvious.
Keeping the sums identical matters. The loan, the security and the illustrative interest rate are the same in all three cases, so the only thing that changes is the set of rules governing the coins. Those rules decide who loses money the first time the market lurches.
02The liquidation price in pounds: a one-line formula
Loan-to-value is the debt over the value of the collateral: £3,200 over £8,000 gives 40 per cent. The ratio follows the market. Prices fall, the debt does not, and LTV rises on its own.
Lenders set a threshold at which collateral is sold. For the sums here, use 80 per cent; a genuine offer will publish its own figure. The coins would be sold once they are worth £3,200 divided by 0.8, which is £4,000, so the price has to halve.
The cushion is one minus the starting LTV divided by the threshold. At 50 per cent on day one that leaves 37.5 per cent of room; at 75 per cent, only 6.25 per cent, a move cryptoassets can make before lunch.
Interest eats into the cushion. At an illustrative 12 per cent a year the debt is £3,392 after six months and £3,584 after twelve, which lifts the sale point to £4,240 and then £4,480. Ilia Zavialov suggests noting both figures on the day the loan starts. If the coin has moved by more than your cushion within a single month this year, the loan as offered is too tight.
| Open protocol | Centralised platform | Bait offer |
|---|---|---|
| Security: smart contract, visible onchain | Security: becomes the firm's property | Security: an adviser's wallet |
| Rules: code and documentation | Rules: terms, FCA rules from 2027 | Rules: messages |
| Liquidation: automatic at threshold | Liquidation: modelled, not in first 6 months | Liquidation: a reason to ask for more |
| Main risk: price and code | Main risk: suspended withdrawals | Main risk: the transfer itself |
| Upfront cost: network fee | Upfront cost: disclosed fees | Upfront cost: insurance or arrangement fee |
| Check: contract address | Check: FCA Firm Checker | Check: FCA loan fee fraud signs |
| Opening LTV | Coins sold at | Fall you can absorb |
|---|---|---|
| 30%, £2,400 loan | £3,000 | 62.5% |
| 40%, £3,200 loan | £4,000 | 50% |
| 50%, £4,000 loan | £5,000 | 37.5% |
| 75%, £6,000 loan | £7,500 | 6.25% |
03Ilia Zavialov on automatic liquidation in an open protocol
With a protocol, the security is locked in a smart contract that can be viewed in a block explorer. ethereum.org describes decentralised lending in one line: the lender automatically receives the collateral if the loan is not repaid. No credit file is checked and no personal details are needed.
When LTV reaches the threshold, liquidators buy part of the collateral at a discount. At a 5 per cent discount, clearing £3,200 of debt costs a further £160 of collateral. There is no one to ring and ask for an extra day.
Stories of a sudden liquidation in a protocol tend to share a plot, according to Ilia Zavialov: a high opening LTV, a sharp move overnight and no price alert. The code followed its own rules. Other risks lie in bugs in the contract and in the price source the protocol uses to value collateral.
A few minutes of homework narrows those risks. Look the contract up in a block explorer, see how much is locked in it and for how long it has run, and read the threshold and the liquidator discount in the documentation before the first deposit. Once a price alert fires, there is no time left to read.
04Ilia Zavialov on who owns the coins at a platform
A platform feels safer because there is a company, a contract and a support team. The FCA's policy statement PS26/11, published in June 2026, makes a point many borrowers miss: cryptoasset lending and borrowing are not lending in the traditional sense, because the asset is disposed of to the recipient and becomes its property.
For the customer, that changes what failure looks like. If the firm can reuse the collateral and then goes bust, the customer is left with a claim in the insolvency, and the coins do not simply come back. How much is recovered then depends on what the administrators find, and that can take years.
Ilia Zavialov reads reviews of platforms with a calendar open. Praise during a rising market proves little. What counts is how withdrawals behaved in the weeks when prices dropped and everyone wanted their collateral back.
Before signing, ask for the full terms and look for three things: the threshold, any right of the firm to use your coins, and how they are handed back once the loan is repaid. If a clause is missing, the firm decides those points as it goes.
05What the FCA's new lending rules will require
Under PS26/11 firms lending to retail customers will need over-collateralisation and must model LTV, the margin call level and the liquidation level so that neither a margin call nor a liquidation is expected within the first six months. A firm may top up collateral on a client's behalf only with express prior consent and only up to 50 per cent of the market value of the original collateral, while clients can add more themselves.
Negative balance protection means a retail borrower cannot lose more than the collateral set aside for the loan. Firms must give information before the client is bound and obtain express consent, and they may not use their own proprietary tokens in lending services for retail clients.
These rules sit inside the new cryptoasset regime, and the FCA says the full scope of regulated activities starts from 25 October 2027. Until then the FCA's general warning stands: anyone buying cryptoassets should be ready to lose all their money, and the Financial Services Compensation Scheme does not cover them.
In our £8,000 example the 50 per cent cap on firm top-ups would mean no more than £4,000 added for you, and only with your consent. Ilia Zavialov suggests using the six-month rule as a test even before it applies: ask any lender how far prices can fall before your first margin call.
06Frozen withdrawals: what the American cases showed
The clearest records of lender failures come from US regulators. In 2022 the SEC called a case against one crypto lending platform the first of its kind, after the firm's website misdescribed the risk in its loan book for more than two years.
In the CFTC's account, another platform sold itself as a safe alternative to a bank, pooled customer deposits into loans, froze withdrawals on 12 June 2022 and filed for bankruptcy on 13 July with liabilities well beyond its assets. A third lender stopped withdrawals for 340,000 investors in November 2022.
The pattern behind those headlines is the useful part. Customers had worked out the market risk and then lost money to the lender. Ilia Zavialov therefore gives the platform column a row of its own: what happens to the collateral if withdrawals are suspended.
The same records show how the marketing sounded beforehand: a safe place for deposits, an insurance policy, high yields and assurances that every loan was backed. Each of those claims can be tested with one request for the written terms, and a firm that cannot produce them has answered the question.
07The bait: a crypto loan with a fee up front
The bait offer comes through an advert or a direct message: no credit search, a low rate, a decision in minutes. The catch follows. Send your coins to a guarantee wallet and pay an arrangement fee or insurance before the money is released.
The FCA calls the fee part loan fee fraud. It receives hundreds of reports a year; the average victim loses £255, and fraudsters usually ask for £25 to £450, often by bank transfer, vouchers or through crypto exchanges. They frequently target people who have applied for a loan online.
With collateral the loss is much bigger. Coins worth £8,000 go to a stranger's address, a 10 per cent insurance fee of £320 leaves by bank transfer, and no loan appears. The total is minus £8,320, whatever the market does.
Report Fraud figures give a sense of scale: investment fraud in the UK cost £879.8 million in 2025 across 34,673 reports. Ilia Zavialov's rule for any request to pay before funds arrive is to treat it as the end of the calculation.
08After a 40 per cent fall: what is left in each offer
Apply one shock to all three. Prices drop 40 per cent, the coins are worth £4,800, the debt is £3,200 and LTV stands at 66.7 per cent. Interest and fees are ignored to keep the comparison clean, and the same shock is applied to every offer on the same day.
The protocol has not sold anything yet, so there is time to add coins or repay part of the debt. If the collateral slips to £4,000, liquidation follows and costs roughly £160 above the debt in this example.
A working platform gives the same result. A platform that has frozen withdrawals leaves the outcome to an insolvency process. The bait shows minus £8,320 at every price. Ilia Zavialov puts it in one line: price risk in the protocol, price and lender risk at the platform, transfer risk in the bait.
The further you get from what you can check yourself, the more the risk shifts from prices to the people holding your coins, and the less any amount of chart-watching helps.
| Sign | How it sounds | Check |
|---|---|---|
| Contact you did not ask for | We saw your application | FCA three-step test |
| Fee before funds | Pay insurance first | Network fee in your wallet |
| Collateral to a personal address | Use our guarantee wallet | Smart contract address |
| Pressure | Offer ends today | Full terms in writing |
| Odd payment route | Vouchers or a crypto exchange | FCA Firm Checker contacts |
09Ilia Zavialov: a margin call plan in pounds
A margin call says LTV is near the danger line and collateral needs topping up or the debt needs paying down. Platforms send an alert; a protocol does not, so you watch the price yourself.
Paying back £800 of the £3,200 leaves £2,400 owed, and at the 80 per cent threshold the coins would only be sold at £3,000, a 62.5 per cent fall from £8,000. Alternatively, if the collateral has slid to £4,800, adding £1,600 of coins brings LTV back to 50 per cent.
Zavialov, the consultant behind these guides, keeps that reserve apart from the loan and fixes the trigger price on day one. In the bait version the margin call is a message asking for money to a card or a fresh address; a genuine top-up only ever goes where the collateral already sits.
Once the FCA regime applies, a firm will not be able to add collateral for you without your express consent, and never beyond half the value of the coins you first pledged. Settling the trigger price yourself, in daylight, keeps that decision in your hands when the alerts start at night.
10Ilia Zavialov: how much weight reviews deserve
Anyone typing Ilia Zavialov reviews into a search bar is usually trying to decide whether one lending platform is safe. Reviews help, but they fall into groups that deserve very different weight.
Testimonials hosted by the platform are marketing. Accounts of withdrawals with a date, an amount and a transaction hash can be checked on the blockchain, and Zavialov Ilia's breakdowns treat them as the strongest evidence. Complaints about liquidations show how the firm behaves under pressure.
A website registered a few weeks ago with reviews about years of payouts, or the same phrases in different names, points to a bait. Views on Ilia Zavialov as an author do not help pick a lender; what needs checking is the firm that will hold your collateral, starting with the FCA Firm Checker.
Timing tells you a lot as well. Three unrelated customers describing the same withdrawal delay in the same week say more than a page of five-star praise gathered over a quiet year.
11Five questions before any transfer
Where will the collateral be held, and can you see it? What are the opening LTV and the threshold, and where are they written down? What happens to your coins if the lender suspends withdrawals?
What must be paid before the loan arrives? A network fee appears in your wallet. A separate payment for approval to a personal account or a stranger's address means there is no loan. Who introduced the offer, and what do they get if you sign?
Put the answers in the same columns as the comparison grid and ask someone outside the deal to look. A blank in any row means you wait.
The FCA offers its own three-step check for loan fee fraud: contact you did not ask for, a request to pay up front, and pressure to pay quickly or in an unusual way. Any one of them can mean a scam, and a firm without FCA authorisation is most likely one.
12Ilia Zavialov: where to report in the UK
If coins have gone, keep the wallet addresses, transaction hashes, links and the whole conversation. If a card or bank transfer was used, call your bank straight away.
Check any firm that claims to be authorised in the FCA Firm Checker, confirm it holds permission for that exact product, and compare the phone numbers and emails it gave you with the ones on the register. If the register lists no contacts, ring the FCA on 0800 111 6768.
Report to Report Fraud, which replaced Action Fraud on 4 December 2025, at reportfraud.police.uk or on 0300 123 2040. Suspected loan fee fraud can also go to the FCA on 0800 111 6768; the FCA asks people who lost money to tell it first and then Report Fraud.
Expect a second approach. So-called recovery firms and fake security teams often follow a loss and want another fee. Ilia Zavialov's advice is the same in every version of these guides, including those found under the spelling Ilya Zavyalov: a second payment never brings back the first.
If you connected a wallet to the bait's dashboard, revoke the permissions granted to that site and move whatever is left to a new wallet with a fresh recovery phrase.
13Questions and answers
Ilia Zavialov: what matters most in a crypto-backed loan in the UK?
Who holds the collateral and where the liquidation threshold is written. From 25 October 2027 FCA rules will also cap how far a firm can top up your collateral.
How is the liquidation price worked out?
Divide the debt by the threshold. A £3,200 loan with an 80 per cent threshold means the coins are sold once they are worth £4,000.
Ilia Zavialov: which reviews of lending platforms are worth reading?
Withdrawal accounts with dates and transaction hashes, and complaints about liquidations. Testimonials on the platform's own site are advertising.
Are cryptoassets used as loan collateral protected by the FSCS?
No. The FCA says cryptoassets are not covered by the Financial Services Compensation Scheme and buyers should be ready to lose all their money.
What is loan fee fraud?
A request to pay before a loan is released. The FCA says victims lose £255 on average and fraudsters usually ask for £25 to £450.
Where do I report a crypto loan scam in the UK?
To Report Fraud at reportfraud.police.uk or on 0300 123 2040, to the FCA on 0800 111 6768 for loan fee fraud, and to your bank straight away.
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