The Blockchain Private Credit Deal That Blackstone Staffers Left to Build — and What It Reveals

Connor Dougherty and Lily Yarborough met at a firm big enough that two people could work in different parts of the same building for years without really coming into contact until they did. This is how many finance careers come together. Before making a decision that still causes controversy in some Manhattan conference rooms, they both worked at Blackstone’s private credit division, where they gained firsthand knowledge of the workings of institutional lending. They left to pursue careers in cryptocurrency. A few years later, they took an even more bizarre action. To unite those two worlds, they founded a business.
The company is called Valinor, and on March 30 it announced a $25 million seed round led by Castle Island Ventures. The founders of TeraWulf, a Bitcoin mining company that switched to AI infrastructure, Maven 11, and Susquehanna’s cryptocurrency trading division also participated. A seed round, six employees, and a very specific thesis regarding the problems with the day-to-day operations of private credit.
This thesis begins with a rather unremarkable observation about the infrastructure supporting one of the areas of finance that is expanding the fastest. Private credit is a vast category of non-bank lending that has grown significantly since bank balance sheets were tightened during the 2008 financial crisis. It affects everything from direct lending to mid-market businesses to corporate revolving credit lines. Additionally, it frequently uses a mix of spreadsheets, email threads, and people who have been assigned to confirm that all requirements have been fulfilled before funds are transferred. “Especially at a private credit firm, you’ve always had someone who’s actually pushing the wire button,” Dougherty remarked, characterizing a procedure that is essentially manual but based on rules in theory.

Valinor specifically uses a $50 million revolving credit line as an example to illustrate the opportunity. Every week, a business takes out money, repays a certain amount, and then borrows again—a never-ending cycle regulated by contractual terms. Technically, each transaction in that cycle must be verified by humans against the terms of the contract. This type of conditional, repetitive, verifiable work is precisely what smart contracts—blockchain-based programs that automatically carry out transactions when predetermined conditions are met—are made to do. Dougherty and Yarborough are wagering that private credit companies will eventually discover that automating blockchain infrastructure in place of those human verification steps lowers errors, expedites settlements, and—possibly most importantly—makes the process simultaneously readable by all parties.
This wager has a larger context, which gives the timing a sense of purpose. In 2026, there has been pressure on private credit. As investors started to pull back due to market anxiety, Blackstone’s flagship nontraded private credit fund, BCRED, permitted redemptions of about 8% in the first quarter, exceeding its usual 5% cap. Jon Gray, the COO of Blackstone, publicly admitted that there was a genuine risk that private credit companies would not fulfill withdrawal requests, and that this risk should be closely watched. Institutional investors and regulators alike frequently worry about the opacity of private credit, which is the inability to see what’s inside these funds, how loans are performing, or whether reported valuations match reality. Blockchain-based infrastructure may be able to reduce at least some of that opacity by generating shared, unchangeable records of lending activity. Valinor is a “translation agent” between the private credit and cryptocurrency sectors, according to Castle Island general partner Sean Judge, who spearheaded the round. The more unsettling implication that the private credit sector requires a translation agent in part because it has been functioning in ways that are difficult to translate is perhaps understated by that accurate framing.
As an early market, it makes sense that Valinor has already used its technology to arrange loans for a few fintech and cryptocurrency companies; these borrowers are already operating in blockchain environments and are likely more open to receiving credit through one. What Dougherty refers to as “real economy credit,” the longer-term goal, is far more complicated. It takes not only technical evidence but also regulatory clarity, institutional trust, and a long runway of successful transactions to persuade well-established private credit firms to reroute their operational infrastructure through blockchain systems. In finance, where conservatism is frequently mistaken for wisdom and vice versa, none of those things happen quickly.
As this progresses, it seems that whether Valinor’s technology is effective isn’t the most fascinating question. For many years, smart contracts have reliably performed conditional transactions based on rules. The question is whether a system that makes its inner workings more visible and automated will be welcomed by the private credit industry, which has grown enormously and profitably by operating in ways that are purposefully opaque and manually managed. Historically, those with more knowledge than their counterparts have not benefited from transparency. However, it’s possible that the industry’s calculations are starting to change as institutional skepticism and redemption requests increase. It’s probably best to find out from two individuals who were employed in that industry prior to choosing to rebuild a portion of it from outside.