Anonymous Group Claims Blockfi Facing Solvency Issues Due to Exposure to the BTC Trust

The unnamed group says Blockfee, which holds $1.8 billion in client funds invested in GBTC by Grayscale Investment, may face insolvency problems linked to a negative premium on GBTC shares. Using a negative premium of minus 7.89% on GBTC shares to illustrate the extent of the problem, the unnamed group says Blockfi suffered a $232 million loss.

Anonymous group threatens insolvency Blockfi

According to a statement posted on the anonymous group’s website, Blockfee, which promises its investors a 6% annual interest rate, can only earn for its investors if the premium on GBTC shares exceeds 8%. Blockfi has to pay a management fee of 2% on top of the 6% it promises its investors.

Anonymous Group Claims Blockfi Facing Solvency Issues Due to Exposure to the BTC Trust

But as recently reported, the premium (or discount) on GBTC dropped on the 4th. March briefly reached a record low of nearly minus 12%. However, at the time of writing, the discount on this indicator has fallen to minus 4.73%.

Meanwhile, in its largely anti-blockchain letter, the anonymous group accuses the cryptocurrency firm of pursuing business strategies that harm the interests of investors. For example, a group calling itself the Ditchblockfi team claims that Blockfi investors and institutional borrowers have reported that the cryptocurrency lender has more than $2 billion in unsecured loans to proprietary trading firms.

Enclosed paragraph

In describing the alleged unsecured loans, the anonymous group claims that they are opaque private contracts outside the platform, which are not disclosed on Blockfi’s website or in its terms of service.

The group then adds:

Although these are highly successful commercial ventures, defaults do occur, and Blockfi is a central counterparty for every private depositor and corporate borrower. Since many of their loans are concentrated loans of over $100 million, a single default could easily swallow up Blockfi’s equity and push the company into insolvency proceedings.

To protect against potential losses that could result from risky trading practices, Blockfi states in its terms and conditions that in the event of extreme market conditions, payments could be permanently interrupted. However, the Ditchblockfi team used this point to debunk Blockfi, by suggesting that market conditions might have been built in that would allow their unsecured borrowers to default on their loans, resulting in Blockfi’s inability to make deposits.

Anonymous Group Claims Blockfi Facing Solvency Issues Due to Exposure to the BTC Trust

However, since Blockfi is not licensed as a bank, it is not regulated to hold deposits like a bank, the indictment says. So that means that if it (Blockfi) has solvency problems, it will not be bailed out by the Fed.

Public discussions

Meanwhile, an anonymous group is trying to bolster its claims against Blockfi by posting screenshots of recent public discussions in which Twitter users appear to be discussing the lender’s unfavorable financial situation.

Anonymous Group Claims Blockfi Facing Solvency Issues Due to Exposure to the BTC Trust

The anonymous group then completes their file by asking other informants who might share information to contact them. For its part, Blockfi recently complained about a wave of attacks this week when it saw 1,000 fake registration emails spamming the platform’s registration page. In addition, financial services platform Blockfi announced Friday that it had raised $350 million in a Series D funding round.

What do you think of the anonymous group’s allegations against Blockfi? Tell us what you think in the comments below.

Photo credit: Shutterstock, Pixabay, Wiki Commons

Denial: This article is for information only. It is not a direct offer or invitation to buy or sell, nor is it a recommendation or endorsement of a product, service or company. does not provide investment, tax, legal, or accounting advice. Neither the company nor the author shall be liable, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services referred to in this article.

how much are bitcoins worth,bitcoin stock price,Privacy settings,How Search works

You May Also Like

Robinhood and GameStop proved we need a new financial system

We probably remember King Midas from the fable we tell our children,…

‘Top around $390K’ — New chart shows this Bitcoin bull run is only beginning

Bitcoin (BTC) could reach nearly $400,000 in this bull run simply by…

Bitcoin ‘better than gold’ if you study it, fund manager tells mainstream media

Bitcoin (BTC) is outperforming gold if investors take the time to buy…

BTG Pactual’s new Bitcoin fund teams up with Gemini for custody

Gemini, founded by Tyler and Cameron Winklevoss in the United States, has…