I've said this before, but it's always worth repeating whenever this question comes up. I suggest you go and take a look at the Terms of Service of these platforms and see just exactly what you are signing up for and just exactly what you are allowing them to do with your coins. Emphasis mine:
Except where prohibited or limited by applicable law, BlockFi has the right, without further notice to you, to pledge, repledge, hypothecate, rehypothecate, sell, lend, or otherwise transfer, invest or use any amount of such cryptocurrency, separately or together with other property, with all attendant rights of ownership, and for any period of time and without retaining in BlockFi’s possession and/or control a like amount of cryptocurrency, and to use or invest such cryptocurrency at its own risk.
In consideration for the Rewards payable to you on your Celsius Account and the use of our Services, you grant Celsius, subject to applicable law and for the duration of the period during which the Eligible Digital Assets are loaned to us through your Celsius Account, all right and title to such Digital Assets, including ownership rights, and the right, without further notice to you, to hold such Digital Assets in Celsius’ own Virtual Wallet or elsewhere, and to pledge, re-pledge, hypothecate, rehypothecate, sell, lend, or otherwise transfer or use any amount of such Digital Assets, separately or together with other property, with all attendant rights of ownership, and for any period of time, and without retaining in Celsius’ possession and/or control a like amount of Digital Assets or any other monies or assets, and to use or invest such Digital Assets in Celsius’ full discretion.
They both contain pretty much identical wording. Any coins you deposit to their platform will be handed out to a variety of unknown third parties in a variety of mechanisms (including investments and loans), be they individuals, businesses, exchanges, banks, anyone at all. The platform
will not hold any collateral to cover your coins, and they won't tell you who they are giving your coins to. If one of those anonymous third parties defaults on their loan, wave goodbye to your coins. If one of those investment vehicles turns out to be a scam, wave goodbye to your coins. If they choose poor investments, wave goodbye to your coins. If one of the third parties goes bankrupt, or scams, or disappears, or ceases trading, etc., wave goodbye to your coins. You aren't just placing complete trust in either BlockFi or Celsius, but you are also placing complete trust in a variety of completely unknown third parties.
So, what happens if everything goes bad? Let's take a look. Again, emphasis mine:
You will indemnify and hold us and our affiliates harmless from any losses, damages, suits and expenses, of whatever kind, including reasonable attorneys’ fees, which we may incur in connection with or arising out of your use of your Crypto Interest Account or our activities in connection with such account, your violation of any law, regulation, order or other legal mandate, or the rights of a third party, or any act or omission by your agent, representative or third-party service provider while using your Crypto Interest Account, regardless of whether the specific use was expressly authorized by you.
You agree to indemnify and hold harmless Celsius and its Affiliates, and their respective employees, managers, officers, directors, partners and shareholders from any losses, damages, suits and expenses, of whatever kind, including reasonable legal fees, that we incur in connection with or arising out of your access to or use of the Services, or our activities in connection with such Services, and for your breach of these Terms or violation of any law, regulation, order or other legal mandate, or the rights of a third party, or any act or omission by you or any person acting on your behalf while using your Celsius Account, regardless of whether the specific use was expressly authorized by you.
Identical wording again. You cannot hold BlockFi/Celsius or any of these third parties responsible
in any way whatsoever for loss of your coins. You deposit some coins and they lose them all making bad trades, loans, or investments? Oops. Their bad. You just have to suck it up and move on. Even if they take your coins and hand them to a known scammer, there is nothing you can do about it.
Given that bitcoin is currently sitting at 450% gains from where we were 1 year ago, is it really worth risking all your coins like this for ~4.5% gains?
