RIADeFiPublished by Ketju Research
Refusal file · other

Why Ketju rejected Figure Markets Democratized Prime

Memo v1Published by Ketju Research

A registry memo, published verbatim and versioned. Superseded versions are recorded, never edited away. A rejection is a judgment for Ketju's client base and thesis, not a universal safety claim. Not investment, legal, tax, or compliance advice.

The memo

REJECTED ON SINGLE-ORIGINATOR CONCENTRATION AND UNILATERAL PLATFORM CONTROL. Democratized Prime is a retail-open ($10 minimum, no accreditation gate) lending marketplace on Provenance where lenders deposit USD or crypto into hourly-cycle pools matched against borrower demand by a Dutch-auction engine. The flagship, highest-yield pool lends against Figure-originated HELOCs, and available reporting indicates that pool is overwhelmingly collateralized by loans Figure itself originated — a lender depositing into the marketplace is effectively taking single-originator credit exposure to Figure's own book, not diversified third-party borrower risk, despite the "marketplace" framing. Figure Markets Holdings, Inc. explicitly retains the unilateral right to "limit, suspend, or terminate access to any Decentralized Protocol Integration or Smart Contract Pool" at any time — a centralized kill switch layered on top of the on-chain mechanics. An adversarial short-seller report alleges Figure's delinquency rates run materially above peer HELOC originators and that governance-token concentration on Provenance could let a small number of accounts halt the network; those specific figures are unverified allegations, not confirmed facts, but the underlying entity-chain and control questions they raise were independently found undisclosed in this review regardless.

What would reopen the file

  • The lending-pool counterparty entity is named and confirmed, resolving the FMHI/Figure Payments Corp/Figure Securities ambiguity
  • Borrower concentration in Figure-originated HELOCs falls to a diversified level, verified from a primary pool-composition disclosure
  • The Morpheus Research delinquency and governance-concentration allegations are independently confirmed or refuted against Figure's 10-K and Provenance on-chain data
  • A disclosed withdrawal queue or gating mechanism exists for a liquidity-stress scenario

Facts on file

Verdict
Rejected
Exposure
other
Chains examined
Provenance
Memo version
v1
Reviewed
Next review

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