BlockFi

[DaC0nsumeR]

Anybody else here have crypto on BlockFi?

What is your reading of the situation of their being investigated for their accounts being unregistered securities?

How much should a customer of theirs worry about this?

[dansus021]

i know blockfi with their program staking system but i never use it but i found announcement regarding your issue https://blockfi.com/disclosures-and-complaints/ i wish the problem is solved

[Anonylz]

Depending on how dip the investigation will be a customer should be on alert regardless, perhaps this could be nothing serious or not, but you should always keep in touch with the issue so you know when to make any serious decision, i don't use them but it is good to be prepared.

[UserU]

I used to park my funds on BlockFi but their manual review process was annoying af because each deposit and withdraw had to be scrutinized before they get approved.

About the allegations though, it's more or less some scare tactics from the authorities just like how they are threatening XRP (Ripple). But still, it's better for the investors to move their funds elsewhere until the storm dies down.

[Bttzed03]

How much should a customer of theirs worry about this?

If you're worried about your funds there, I doubt it will confiscated. The worst case is that your information will be accessed by the regulators. Well, there's nothing much customers can do about that now. You all know it's a centralized platform that's been offering above the industry standard rates. You should have expected something like this to happen.

[magneto]

I think that it is a matter of time before Blockfi and other custodial wallets run into serious legal issues.

They are essentially running a fractional reserve scheme without all the regulatory hassels that traditional banks have to deal with. I don't see how this model is sustainable - just look at the pressures that exchanges are getting recently, including Binance.

Is it really worth all the risk to just get a few percent each year on your BTC? You're much better off just holding it in a private key that you control and let the deflationary aspect of BTC take its course over time.

[Jawhead999]

You should read the T&C of each service before you want to use it, since all of the rules was written there and you can't blame them of any activities they do to you if they do it based on their T&C.

BlockFi is not and will not be responsible or liable for any loss or damage of any sort incurred by you as a result of such cyber-attacks, operational or technical difficulties or suspensions of transfers or withdrawals.

Since it's doesn't insured by the FDIC and other securities, there's no protection on BlockFi.

[o_e_l_e_o]

I would never hold my bitcoin with a third party in the first place, but if I were holding it on BlockFi, I'd definitely be trying to withdraw it now.

BlockFi are a fractional reserve system. The money you deposit to BlockFi is invested elsewhere or handed out as loans. I know they are fighting against these rulings and their official stance is that BlockFi products remain fully operational, but the courts could turn round tomorrow and shut them down or freeze certain accounts and assets. You could end up with your coins locked up in limbo for an undetermined amount of time, or if there is a major ruling against them causes lots of users to start to panic withdraw their coins, you could end up with a bank run and no coins at all.

Is the risk of losing everything really worth it for ~1% a year? You will see plenty of gains just by holding bitcoin in your own wallet, without the additional huge risk that these custodial services bring.

[Daltonik]

BlockFi has filed an application with the SEC to launch an exchange-traded fund (ETF) based on bitcoin futures traded on the Chicago Mercantile Exchange(CME) https://www.sec.gov/Archives/edgar/data/0001540305/000089418921007234/blockficombined.htm

[Daltonik]

BlockFi has filed another application with the SEC, only now to launch a bitcoin ETF with physical collateral in accordance with the Securities Act of 1933.

https://www.sec.gov/Archives/edgar/data/0001853419/000092963821001329/s1.htm

[leea-1334]

BlockFi has filed another application with the SEC, only now to launch a bitcoin ETF with physical collateral in accordance with the Securities Act of 1933.

Interesting,,, seen a lot of ETF applications but this is the first from a pure cefi turning into defi company that most of us should have heard of. Any news how much of collateral is going to be held? Is it just 1-to-1 because even that would really make this something special. Expect many rejections first however

[Daltonik]

BlockFi has filed another application with the SEC, only now to launch a bitcoin ETF with physical collateral in accordance with the Securities Act of 1933.

Interesting,,, seen a lot of ETF applications but this is the first from a pure cefi turning into defi company that most of us should have heard of. Any news how much of collateral is going to be held? Is it just 1-to-1 because even that would really make this something special. Expect many rejections first however

There is no news on this issue yet, because the SEC has been considering applications for a long time, there is another news: a subsidiary of BlockFi has received a license from the Bermuda Monetary Authority for financial activities in the field of digital assets, the company itself also plans to open its office there.
https://blockfi.com/blockfi-selects-bermuda-to-expand-global-operations-footprint-with-new-digital-asset-business-license

[leea-1334]

Interesting,,, seen a lot of ETF applications but this is the first from a pure cefi turning into defi company that most of us should have heard of. Any news how much of collateral is going to be held? Is it just 1-to-1 because even that would really make this something special. Expect many rejections first however

There is no news on this issue yet, because the SEC has been considering applications for a long time, there is another news: a subsidiary of BlockFi has received a license from the Bermuda Monetary Authority for financial activities in the field of digital assets, the company itself also plans to open its office there.
https://blockfi.com/blockfi-selects-bermuda-to-expand-global-operations-footprint-with-new-digital-asset-business-license

I do not feel like any of these jurisdictions make for a big news anymore, and especially since more and more attention is being poured on the island licenses like what happened with Binance and Seychelles (which itself is now being opened up more and more with Panama Papers and all the new things come to light).

I myself do not really understand but supposedly, none of these things are illegal, but "regular" countries frown on them.

[Daltonik]

According to Bloomberg insiders, it turns out that BlockFi has agreed to pay $100 million (a record amount in the history of settlement in the cryptocurrency market) to settle ongoing investigations by the US SEC, and BlockFi will also stop issuing new high-yield accounts for most US residents.

Source: https://www.bloomberg.com/news/articles/2022-02-12/blockfi-to-pay-100-million-to-sec-states-over-crypto-lending?srnd=premium
or if you have problems viewing on bloomberg, you can read in the archive: https://archive.fo/uZGUn

[T-800]

Nexo and Ledn also not available for US users anymore. Both are restructuring their product to better comply with regulations.

Still lots of other options available though (comparison here: https://extracrypto.cc/interest-rates/all-cryptocurrencies/), but they might also discontinue service to US users.

[leea-1334]

Nexo and Ledn also not available for US users anymore. Both are restructuring their product to better comply with regulations.

Still lots of other options available though (comparison here: https://extracrypto.cc/interest-rates/all-cryptocurrencies/), but they might also discontinue service to US users.

I did not know these things were even available to US customers before,,, but if I am not mistaken the last time I looked at Nexo licenses they bore the license for several US states already. So is this now because those banks have withdrawn their licenses or simply just overall Nexo does not want to dig themselves into a problem in the future?

[Daltonik]

The BlockFi platform reported a leak of user data that was hosted in the CRM HubSpot. Hackers managed to gain access to the names, email addresses and phone numbers of BlockFi's clients.
BlockFi found out about the leak on Friday, March 18 and reports that the passwords and documents of customers have not been compromised, and their funds are safe.

[uneng]

It's not the first time Blockfi worries their investors. I remember when I thought about investing there last year, but the platform was unaccessible for some reason, so I just gave up on it. That was a big red alert for me.

However, it ended that it was just a technical issue that didn't cause any negative impacts for investors. Proof of that, it's Blockfi still working pretty stable by now. In my opinion this issue rewarded them with more legitimacy after all.

Now the problem with regulators is tricky, because I fear they are going to create more and more difficulties for crypto banks to operate, in order to protect the traditional banking system. Anyway, a 100$ million dollars fine isn't the end of the world for a company which holds more than 4$ billion dollars in funds.