Crypto Lending Options [Crypto Interest Earning Accounts]

This is a list of various ways to lend out and earn interest on your crypto currency holdings.

Crypto currency lending is a developing area and this an experimental page (far from complete).  We welcome any knowledge that you have on the topic.

Background – My Motivation

I Have a Few Coins

Through various crypto giveaways I’ve accumulated a small collection of crypto currencies.

And the bonus crypto has just been sitting in various wallets and exchanges, sort of like gold in a vault (junk in a trunk?).

Why not earn interest?

But recently I learned that instead of letting the coins sit like gold in a vault, a number of companies/platforms will pay interest on crypto deposits (my crypto deposits would earn interest similar to traditional financial assets).

It’s not exactly a free lunch (figurative), [not to be confused with the (literal) many free lunch deals covered by DoC 🙂 ] as greater returns are generally accompanied with greater risk.  And the risk premiums for these crypto lending options are quite large.

But I figured it was worth a look.

[Free lunches and free money, I’m very grateful Will and Chuck have been serving me and the rest of the free money people since 2013.  What’s better than daily notifications of the $20 bill (sometimes $200 bill) lying on the street?]

Should I just sell instead?

Probably … sell and buy a broadly diversified, low cost index fund [then close up the laptop and head over to MMM Headquarters for some squats].  At least that’s the traditional wisdom [certainly the squat part … the king of exercises?].

But I’ll HODL.  Maybe I could rationalize the investment as a portfolio diversifier, or an asset class with a large potential upside.  But I figure it’s sort of a fun gamble, a small investment where even if it’s a total loss I’ll survive to invest another day.

Options

BlockFi

Details

  • Name: BlockFi Interest Account (BIA)
  • Minimum Investment: None
  • Maximum Investment: Rate is Reduced when BTC > 5 or ETH > 500
  • Fees:
  • Withdrawal Limits:
    • Minimums: 0.003 BTC, 0.056 ETH (smaller withdrawals then these may take 30 days to process)
    • Maximums: 100 BTC, 5K ETH, 1M GUSD per 30 day period
  • Supported Currencies: BTC, ETH, GUSD, LTC, USDC
  • Interface: Web/Browser

Return

  • Interest Rates: (@ 2020-03-30)
    • BTC – 6.0% APY,
    • ETH – 4.5% APY,
    • GUSD – 8.6% APY
    • LTC – 3.8% APY
    • PAX – 8.6% APY
    • USDC – 8.6% APY
  • Interest Payment Schedule: Monthly
  • Interest Type: Compounded Monthly
  • Interest Paid Currency: Your Choice

Risk

  • Lockup Period: None
  • Custodian: Gemini
    • Gemini is licensed by the New York State Department of Financial Services
  • Sense of Legitimacy

Complexity

  • My Experience:
    • Inital Setup: 10-15 Mins (easy setup)
      • Requires KYC: DoB, SSN (no hard pull), and Government ID upload
      • Web/Browser Interface is clean/simple to use
  • Others Experience (from the Comments):

Links

BlockFi Referral [Referral Code: 536e28ad enter on signup] | Direct Link

  • For each friend you refer, your friend will earn $50 in BTC, and you will earn $25 in BTC
  • Your friend must deposit $350 or more worth of crypto
  • Deposit by 12/31/20 and maintain balance until 01/31/21
  • Full Details Full Details

Celsius

Details

  • Name: Celsius Network Wallet
  • Minimum Investment: None
  • Maximum Investment: None
  • Fees:
    • No Account Fee
    • No Withdrawal Fees
  • Withdrawal Limits:
  • Supported Currencies: BCH, BTC, BTG, CEL, DAI, DASH, EOS, ETH, GUSD, LTC, MCDAI, OMG, ORBS, PAX, TAUD, TCAD, TGBP, THKD, TUSD, USDC, USDT, XLM, XRP, ZEC, ZRX
  • Interface: App (available Apple and Android versions)

Return

  • Interest Rates: (@2020-03-24)
    • BTC – 3.92%
    • ETH – 2.33%
    • GUSD – 7.25%
    • USDC – 7.25%
  • Interest Payment Schedule: Weekly
  • Interest Type: Simple Interest (Interest does not earn interest) Update: Feb 2020 Now Compounding
  • Interest Paid Currency:  in-kind (the same currency deposited)
    • [Not Available in US] Celsius has their own CEL tokens which can be earned as interest payments but are not available in the US (more on CEL Token per comment)

Risk

  • Lockup Period: None
  • Custodian: Fireblocks [Previous: BitGo]
  • Sense of Legitimacy
    • Investors: ICO Proceeds
    • Assets: 300M+
    • Offices: UK (London), US (NY, NJ), IL (Tel Aviv)
    • Background Article: Link

Complexity

  • My Experience:
    • Initial Setup: 15-20 mins (fairly quick)
      • Requires App Installation
        • Available for Apple and Android Devices
        • App is good with a few quirks
      • Requires KYC: DoB, SSN (no hard pull), Government ID (pictures taken within app)
  • Others Experience (from the Comments):

Links

Celsius Referral [*Referral Code: 1039135092 enter on signup] | Direct Link

*Celsius Referral Program – $400 deposit required within 5 days for both parties to receive $40 in BTC [enter code during registration].  Wallet balance value is based on time of deposit (all coins qualify).  Deposit must be maintained for 30 days to unlock BTC reward

At times Celsius releases bonus deposit codes

Crypto.com

Details

  • Name: Earn
  • Minimum Investment: $250 (but varies by coin, see FAQ)
  • Maximum Investment: $500K (but varies by stake [larger at larger stake], see FAQ)
  • Fees/Limits:
    • No Account Fee
    • Withdrawal Fees apply (vary by coin)
  • Supported Currencies:
    • BTC, CRO, MCO, ETH, LTC, XRP, BNB, BAT, LINK, MKR, DAI, PAXG, ATOM, BCH, VET, ICX, ADA, ENJ
    • PAX, TUSD, TAUD, TCAD, TGBP, USDC, USDT [Not US]
    • EOS, XLM, XTZ
    • Various geographic restrictions apply
  • Interface: App (Android & Apple versions)

Return

  • Rate: FAQ
  • Interest Payment Schedule: Daily Interest, Paid Weekly
  • Interest Type: Simple Interest (Interest does not earn interest)
  • Interest Paid Currency: in-kind (the same currency deposited)

Risk

Complexity

  • My Experience:
    • Initial Setup: 10-15 mins
    • Downloaded the App to my phone
    • KYC process required my name, email, phone, driver license, and a selfie picture
    • Able to add funds with crypto transfer and bank ACH easily (debit and credit card loads while supported are often blocked by the issuer and more challenging to get working)

Links

My Referral [Enter Code: d8ujefff94 on App Start] if you are interested in staking MCO (thank you).

Sign up through a referral link and complete KYC to earn $50 USD equivalent of MCO tokens when you stake 50 MCO tokens for 6 months.

We looked at the value of the referral bonus and other Crypto.com products in the post Crypto.com Review – App, Card, Earn, and Referrals

Nexo

Details

  • Minimum Investment: $1 (in stable coins per chat)
  • Maximum Investment: $2M
  • Fees:
    • No Account Fees
    • No Withdrawal Fees
  • Withdrawal Limits:
    • $20,000/day cryptocurrency with no verification
    • $100,000/day cryptocurrency with basic verification
    • Bank withdrawals require advanced verification (KYC)
      • $200,000/month (up to $2M on request)
  • Supported Currencies:
    • Many Stable Coins: DAI, PAX, TUSD, USDC, USDT, …
    • Many Other Coins: BTC, ETH, XRP, XLM, LTC, BCH, EOS, …
  • Interface: Web/Browser

Return

  • Interest Rate: (@ 2020-06-30)
    • 8% APY all stable coins
    • 4% APY non-stable coins
      • *Having a 10% allocation to NEXO tokens increases rates from 8% to 10%, and 4% to 5% respectively
  • Interest Payment Schedule: Daily
  • Interest Type: Compound
  • Interest Paid Currency: In-kind

Risk

Complexity

  • My Experience
    • Initial Setup 10-15 mins
      • I was able to quickly create an account online
      • Needed to enable two factor authentication before deposit (I’ve used Google Authenticator app with all the services listed on this page)
    • Does not appear to require KYC for interest earning on stable coins
    • Minor Confusion – all stable coins are listed under the one Stablecoins entry in the accounts management screen
  • Others Experience (from the Comments):

Links

Nexo Direct Link

Not Currently Listed

Proof of Stake Coins

  • Examples: Algorand, Dash, Decred, Tezos

Decentralized Finance (DeFi) Platforms

  • Examples: Compound, dYdX, MakerDAO, Nuo

Lending Bots

  • Examples: Coinlend, Cryptolend

Additional Companies

  • Examples Binance, Crypto.com, …

Peer-to-Peer Crypto Lending

Analysis

Comparison

Risk/Trust

On the trust spectrum, I feel most comfortable with BlockFi and least comfortable with Nexo.  Nexo raises enough red flags with a lack of transparency (regulator, location, …) that I’m hesitant to invest much with the platform.  But in fairness Nexo does appear to be one of the most popular options available and has a relatively long track record in the space.

Return

Nexo is the quickest interest payer (daily) and BlockFi is the slowest (monthly).  Celsius is in the middle (weekly), but while Nexo and BlockFi offer compound interest (which I view as the normal way of paying/earning interest – where you earn interest on your interest) Celsius does not pay interest on earned interest which is a confusing negative [Celsius will pay compounding interest starting Feb 2020].

Complexity (Startup)

It was quick to get started on all the platforms (all under 15-20 mins).  Nexo was probably the quickest with no KYC, while Celsius took the most time with the app only interface.

Scenarios

Perhaps a couple scenarios might be helpful, the following were two of my goals:

Goal: Earn the highest rate lending bitcoin (BTC)

With the goal of earning the highest rate on my BTC, I went to LoanScan clicked on the Crypto tab and then sorted by the BTC column.   On 2019-10-12, I saw that BlockFi was offering the best rate so I moved my BTC there.

Goal: Earn the highest rate lending USDC stable coins

From an investment perspective, I believe that Will was right on in stating that it is better to stick with a high yield savings account and earn a higher rate with less risk, than to convert your dollars into USDC stored at Coinbase and earn 1.25% 0.15% (updated 2020-07-01).

But what if we could get a significantly higher rate?  Using LoanScan, on the U.S. Dollars tab, I sorted by the USDC column.  On 2019-10-12, I saw that Celsius was offering the best rate at 8.20%.  So I decided to trade a number of altcoins into USDCs within my Coinbase account and then transfer the USDCs to Celsius.

Note: 8.20% was not the best stable coin rate overall, per LoanScan BlockFi was offering 8.60% on GUSD.

Tools

FAQs

How does my crypto earn interest?

These platforms lend out your crypto to borrowers in the form of collateralized loans.  [Celsius FAQ], [BlockFi Who Borrows]

Generally the loans are over-collateralized in that borrowers can only borrow a portion of the assets put up as collateral (but this may vary by the credit worthiness of the borrower/institution).

Taxes

I believe interest earned is taxable. [For the 2019 tax year, BlockFi generated a 1099-MISC form if you lived in the US and earned over $600 in interest]

Available in my State?

The platforms are available to residents of most states.  Exclusions:

  • BlockFi: CT, NY, WA, and WY
  • Celsius: NY (Now Available), TX (Stable Coins), WA
  • Crypto.com: NY

Risks

In addition to all the standard warnings, this is not financial or legal advice.  Please do your own research and thinking before taking any actions.  The following is a list of potential risks, but there are more risks than those listed below.

  • “No Insurance” Risk
    • Deposits in crypto lending platforms are generally NOT insured.  They are NOT insured by the FDIC, NCUA, or SIPC.
    • Some platforms have insurance provided by third party insurers/custodians (like BitGo) but this is not government backed insurance, and it may only insure a portion of a loss (at the company vs. the individual account level).
  • Price Risk
    • Many crypto currencies are highly volatility and may drop significantly in price over very short periods of time
    • Some stable coins (which are pegged to less volatile currencies like the USD) should be less volatile
      • But stable coins have their own risk factors and may not perform as expected in all market conditions
  • Technology Risk
    • The technology underlying the crypto currencies and the lending platforms and protocols may break or fail
    • It’s possible that the cryptography used to protect cryptocurrencies may in the future be broken by more advanced (quantum) computers
  • Counterparty/Bankruptcy Risk
    • The lending companies may fail
      • Insurance may offer some protection
      • Decentralized (DeFi) protocols may offer some protection by removing the middle man (but may have their own risk factors)
  • Legal Risk
    • Regulatory structures and legal precedent may not be well defined around these technologies
    • While increased regulatory scrutiny to protect financial incumbents may pose risks as well
  • Economic Model Risk
    • The models (asset securitization, incentive structure, …) may not always work as intended, or may be exploitable
    • In addition the governance of the coin or protocol may fail
    • Example: MakerDAO and the ETH price drop
  • User Error Risk
    • You may mess up when entering an address and transfer funds to the wrong location, or lose your key and the ability to access your funds.
    • In general, there is no undo button or reversal process
  • Market Risk
    • There is a large spread between the risk free savings rate and the interest rates offered by these crypto lending platforms (a large risk premium).  The wisdom of the market views these lending options as riskier than traditional savings products.
    • Thinly traded crypto markets may be susceptible to market manipulation
    • Thin markets may offer limited liquidity and the ability to make a trade at a good price
  • Rate Risk
    • Rates earned on crypto currencies will fluctuate with market conditions and are not guaranteed for any period of time.

Final Notes

If this post is helpful to the community, I’ll fill it out with more options and links to valuable comments.

All the Best!

History

  • 2021-04-08:
    • Updated Celsius referral program, moved to $40 bonus on a $400 deposit, [from $20 bonus on a $200 deposit]
  •  2020-12-08:
  • 2020-07-07:
    • The BlockFi referral offer is now $20 in BTC to new signups with a $500 deposit (and $50 to the referrer) through 2020-08-14 [HT: Ed E.].  I don’t think this is a good offer for the new user.  The previous standard referral offer was $10 in BTC to new signups with a $100 deposit (and $10 to the referrer), for larger deposits BlockFi is running a new user trading bonus.  BlockFi has been trying out a lot of different promotions, so something better will probably come along soon [I think the best we’ve seen percentage-wise was a $100 bonus on a $200 deposit].
  •  2020-07-27:
    • The BlockFi referral offer is now $20 in BTC to new signups with a $500 deposit (and $50 to the referrer) [through 2020-08-14].
      • Previous offer was $10 in BTC on new signups with a $100 deposit (and $10 to the referrer).
  •  2020-07-21:
  •  2020-07-09:
  •  2020-06-30:
    • Updated the Celsius referral bonus from $10 for both parties, to $20 for both parties (HT: Benji)
    • Added the $2.6M fee error
    • Updated Coins supported by Nexo to include non-stable coins, and updated rates (8% stable, 4% non-stable)
    • Added Crypto.com
  •  2020-05-16:
    • Celsius is now available in NY
    • Removed Expired BlockFi $100 Signup Promotion
    • Added link to Celsius Deposit Promo Codes Page
    • Added Risks:
      • Quantum Computers, Exchange failing with heavy volume, liquidity risk
  • 2020-05-01: Updated Celsius’s custodian from BitGo to Fireblocks
  • 2020-04-30:
    • Added Genesis 39% BTC drop story
    • Update BlockFi promotion
  • 2020-04-20: Added risks (market manipulation, increased regulatory scrutiny)
  • 2020-04-10: Added Bisq hack example
  • 2020-03-30: BlockFi Updates: added PAX, updated rates
  • 2020-03-26: Added risk examples bZx attack and ETH price drop
  • 2020-03-24:
    • BlockFi: Adjusted Rates, updated currencies, updated referral/promotions, added additional fundraise
    • Celsius: Update currencies, rates
  • 2020-01-24: Adjusted BlockFi earning rates for BTC, ETH
  • 2020-01-24: Celsius is moving to compounding interest Feb 1st
  • 2020-01-08: Added USDC and LTC to BlockFi, updated rates
  • 2019-10-23: Original Post

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Davis

BlockFI is getting rid of their one free withdrawal a month. It has no use to me now so will close and try to churn it.

Tomtoo
Tomtoo

Saw that coming when Gemini did the same thing on June 15: no more 10 free withdrawals per month. Only exception is unlimited free withdrawals of GUSD.

Slowbrake
Slowbrake

Not that anyone asked, but it would probably be a good time to revaluate risk if you’ve got money in these CeFi savings companies.

Genevieve Artadi
Genevieve Artadi

Slowbrake what are the safest plays right now, especially for stablecoin interest?

Slowbrake
Slowbrake

I pulled all my stoozing money from Cefi to put it into Elements CU at 4% and a couple other rewards checking accounts.

My heuristic – Without transparency the lowest risk ones should be US based (SEC purview) and have a profitable ancillary business tacked on – assume risk management is equal and no mysterious benefactors to backstop losses (IE the Tether money printer)

So if it’s got an exchange, wallet, credit card – though probably not debit card, or fiat ramp/usecase than it should have money coming for paying interest. I don’t consider institutional lending important because the rumored numbers don’t make sense to me, though there may be things in the spot BTC ETFs or futures that I don’t know and it could rain money.

From that outline – Voyager and Gemini tick all the boxes for me. But one should really ask if the extra 2-5% YEARLY over a rewards checking account is worth it.

Slowbrake
Slowbrake

New to me info: 3 Arrows Capital has disappeared, so Voyager is out for at least two quarters. Gemini: Celsius has a stockpile of GUSD and I don’t like the supply fluctuations.

Big fed rate increase, FDIC accounts will follow.

None of these accounts are worth the risk for now, safest or not.

Genevieve Artadi
Genevieve Artadi

Slowbrake does it mean you think GUSD or Gemini Earn is risky now?

Slowbrake
Slowbrake

Risky enough to make a taxable 0.5% gain (over a rewards checking account) over 3-4 months not worth it. Yes.

MC
MC

Wow…did you know something the rest of us didn’t? lol
the Kwontagion is real

Genevieve Artadi
Genevieve Artadi

Does anyone know whether any crypto bonuses offered by these exchanges and apps can be churned? Davis I’ve had Cake DeFi, Celsius, Nexo, Hodlnaut, BlockFi, WeBull, eToro, Voyager, Abra, OKcoin etc… and closed all the accounts after getting the bonuses. Now I’m just wondering which of these is worth wasting time for? Are any of these confirmed to be churnable? Slowbrake

Davis

Coinbase has a promo to get $10 in ETH for every $100 in ETH you stake (up to $500 in ETH) in addition to 3.67% APR. First stake only, void in NY and HI. Looks like payout in 2 days so this seems fairly low risk https://help.coinbase.com/en/coinbase/getting-started/getting-started-with-coinbase/existing-user-incentive

sg77

DId you do this Coinbase staking offer, and did the bonus post?

Davis

still waiting on my ach to settle at blockfi before converting to eth and sending to coinbase

sg77

I’m curious, why were you going to buy ETH at blockfi instead of coinbase? I know that Coinbase has high fees in some cases, but Coinbase Pro or the recently-added Advanced Trade interface on the regular Coinbase site has decent fees.

Davis

One free transfer of non-stablecoin crypto and of a stablecoin crypto per month

sg77

But if you were going to leave the ETH on Coinbase, wouldn’t buying the ETH on Coinbase avoid a fee anyway? (Or would Coinbase require you to send the ETH to a different address and charge a fee?)

Davis

I’m not sure on the Coinbase fees. I just had a transfer fee before and decided it was better to do as fewer buys and trades from it as possible.

Davis

I read the DoC post about it and looks like even though I’d get the reward in 2 days, the staked amount would have to be staked until Ethereum 2.0 is done, which could take a while. So I withdrew my BlockFi amount back to my bank. If Ethereum 2.0 occurs and this promotion is back, I think I’ll do it, but I imagine the promo would end at that point.

Davis

OkCoin is offering 265% estimated APY on NYCCoin, 145% estimated APY on MIACoin, and 20% estimated APY on UST via the Anchor protocol. I’ve been doing the MIACoin one since it started at 490% APY and while I may have been earning a good return on my MIACoin in the form of more MIACoin, the coin’s value has absolutely tanked. I’ll try out NYCCoin for a bit with the STX that my MIA is earning but I think the UST offer is the best

Jon
Jon

How well has all of this played out for you?

fubag
fubag

stablegains has been going pretty well for a while with 15% returns in exchange for doing all the work for you to get it to the anchor protocol (about 19.45% there direct) with ACH on ramp no fees, and USDC free in and out (they cover all gas fees); they recently listed themselves on product hunt too, but check them out: https://app.stablegains.com/signup?ref=WM59RC8TXW

Tomtoo
Tomtoo

AND ANOTHER DOMINO FALLS…FOR NOW (SORRY, THE PARAGRPHS KEEP JAMMING TOGETHER EVEN WHEN I TRIED TO EDIT THIS): Immediate Changes to Nexo’s Earn Interest Product in the U.S. As one of the world’s most trusted digital asset institutions and a company committed to compliance with applicable laws in its jurisdictions of operation, Nexo is announcing important changes to the Earn Interest Product for clients in the United States. As the regulatory framework for digital assets continues to evolve, we remain committed to doing the same and to continue providing our clients with the best possible solutions for their digital assets. We are encouraged by the first-of-its-kind settlement announced by the U.S. Securities and Exchange Commission and over 32 U.S. states on February 14, 2022, as it brings much-needed clarity to Crypto Asset Interest-bearing Accounts and to the provision of such services going forward. To this effect, we would like to inform you that Nexo has voluntarily determined to implement significant changes to its Earn Interest Product in the U.S. in order to be in compliance with the newly-announced guidance. All assets entrusted to Nexo are safe and accessible to all clients as always. Details of Armanino’s real-time audit of Nexo’s reserves can be found here. We believe these changes, effective immediately, reflect a sustainable path forward for our Earn Interest Product in the U.S. Key Takeaways: The current changes only affect the Earn Interest Product for U.S. citizens and residents, while non-U.S. clients are not affected by any of these changes. U.S. clients will continue to enjoy uninterrupted access to all other Nexo products.1 Existing U.S. Clients: You will continue to earn interest on your current Savings Wallet balances only. New top-ups to your Savings Wallet as of today will not earn interest until the restructuring of the Earn Interest Product and the registration process with the relevant regulatory bodies are finalized, as per the recently announced guidance. Once complete, eligible U.S. clients will be migrated to the Earn Interest Product 2.0 and new top-ups will earn interest. info icon Please note that any assets withdrawn from your Savings Wallet, even if returned later, will be treated as new top-ups and will not earn you interest. New U.S. Clients: The Earn Interest Product in its current form will not be available for new U.S. clients until the restructuring into Earn Interest Product 2.0 and the registration process with the relevant… Read more »

fubag
fubag

Celsius fell today too lol

Davis

Hodlnaut is offering, in addition to the 12% APR on USDC, a deposit bonus of

Deposit $..5000 get $..30 (1.96% APR)
Deposit $10000 get $100 (3.26% APR)
Deposit $15000 get $180 (3.91% APR)

That can all be stacked and must remain there for 16 weeks. The offer expires 2/20. You do have to fill out a form after you make the deposit https://www.hodlnaut.com/crypto-offers/hodlnaut-stables-deposit-rush

sg77

The rumor about BlockFi settling with the SEC is that “As part of its agreement with regulators, BlockFi will no longer be able to open new interest-yielding accounts for most Americans”. https://www.bloomberg.com/news/articles/2022-02-12/blockfi-to-pay-100-million-to-sec-states-over-crypto-lending

I wonder if I should open a BlockFi account now, to get in before they block new customers from the US (if the rumor is true, and if they let existing users keep their accounts). But it was never that appealing to me anyway.

Olivia
Olivia

I saw this.. how does everyone feel about safety to keep funds with BlockFi, now that they lost 100 million in these fees and are moving their headquarters offshores? I have quite a bit of funds with BlockFi.. just wonder people thoughts on it. 100 million sounds like a lot. For a company like BlockFi wouldn’t that put them close to going out of business, I guess is my concern.

Olivia
Olivia
Slowbrake
Slowbrake

Unplug for a romantic weekend and get left behind.

I am leaving BTC there. I know ‘preserve the principal’ and ‘time in market’ are the only ways I make crypto money. My fragile opinion – risking 5%+ of your net worth for stablecoin interest – not worth it, holding some BTC for price appreciation+interest – probably ok.

My heuristic asks “How will these companies fail.” A) – Run out of VC/Startup money and drop rates to zero before saying ‘everyone withdraw your funds, thanks for taking this journey with us yadda yadda yadda’ or B) – Explode like Madoff with ‘risk management failed, no money left’

I think BlockFi is trying to be above board so if it fails it will be like “A.” It is a US based company, 2 US citizen founders, both with relevant experience – Fintech and alternative loans – and they stayed away from Tether. They raised lots of capital (Bain, Tiger Global, and Susquehanna in 2021) and started the credit card (not debit) because they are doing everything normal. BlockFi can’t ask Tether for unbacked money – which is a good thing – and if they blow up fraud style the founders could face jailtime. That could have made them a prime SEC target because the SEC wants a simple prototype company so case law can be applied broadly. Not fraudulent books and defendants who won’t show up to court.

Contrast with other big names. Foreign companies with poor legal oversight run by foreign nationals without relevant experience. Close ties with fraudsters. I think they will blow up with via court/hack or figure out a profitable business model, go clean, and legitimize things. Any rough patches can be funded by Tether/Giancarlo.

Here’s the SEC complaint from 2/14/22: https://www.sec.gov/litigation/admin/2022/33-11029.pdf

The most interesting part notes that 17% of BlockFi’s loans are overcollateralized (not %100) and that institutions get undercollateralized loans. Really smells of the standard crypto MO of transferring fiat money from the bourgeois to the rich through sweetheart deals.

Also the 50 millions to the SEC is spread out over 2 years, not sure about the states – so maybe the SEC thinks they’ll be solvent for 2 years after looking at the books.

Alex - big_deals🔗

@Slowbrake
Any thoughts about Gemini and Ledn?

Slowbrake
Slowbrake

I feel that Gemini is Tier 1 safe, but I haven’t dug into them – the market and media don’t suspect anything as they shuffle towards an IPO.

Gemini dollar is claimed to be backed by FDIC insured cash and short term treasuries. They have a monthly audit to back it up. NY regulators only approve 3 stablecoins – Gemini, Binance, and Paxos. If I wanted the safest crypto savings account – I would use their dollar at Gemini Earn.

I like Ledn too, but it’s just reputation and bias. They are raising money from groups that I feel do proper due diligence and those groups keep giving them money. Their relationship with Genesis is a big halo effect for me. I think their Co-founder CSO is the weakest link in the company, unfortunately that’s a big deal. They are on my shortlist for BTC.

Olivia
Olivia

Slowbrake i want to move my funds to Gemini. I have been earning interest on stablecoins.. but I’m concerned how Gemini is so big and so trusted but they are the only one of the big CeFis that doesn’t advertise any kind of insurance for the balances or user accounts. Crypto.com advertises 250k of insurance per user for certain things like hacks.. and Nexo advertises that they have insurance on all of their coins and that they get audited regularly. I have seen either of those things advertised by Gemini so I wonder if anything is in place? Would you personally trust say 35% of your total investments with Gemini? I’m genuinely curious about this because Gemini would be far and away the best option if only they offered their clients, users more protection in form of insurance, etc. but curious your thoughts but I’m still learning.. and trying to decide where to go now that I withdrew everything from BlockFi.

Slowbrake
Slowbrake

Gemini does have some insurance for the crypto. They have to carry some state mandated insurance and started their own insurance company to insure themselves. They advirtise hot wallet coverage, which is rare, but also make it clear if your password is stolen – you get no coverage. Quick search seems to say $200 million.

35%? no, not as a new investment. That would be years of my paychecks. 5%? probably, but only after maxing out 401k, emergency fund, and other responsible adult things. And it would just be the dry powder for other crypto opportunities.

I don’t really hold stablecoins with primary intent of making interest. S&P returned 21% last year. Stablecoins returned half that and taxed. With 7% inflation the taxed interest probably won’t keep purchasing power stable. The risks are going to be nearly identical with BTC or USDC at these places – and BTC can go up (or down.)

And choosing between putting a dollar into XOM with 4% dividend vs GUSD Manasa R? BoA Preferred stocks with 6% vs USDC @ 9? It’s difficult for me to accept the risks of crypto with a cap on the upside just a few points above traditional. That’s crypto’s advantage right now, much better upside since the value is so divorced from real world fundamentals.

I don’t envy your position just getting started. A lot of people got in early and play with house money now – which totally puts risk on tilt – and aren’t giving out thoughtful advice. Hopefully these ideas are helpful.

dealbreezy

DYOR but Midas Investments has insane rewards on blue chips like BTC (17% APY) and ETH (23% APY), as well as stablecoins (USDC 19% APY). Been using them for a few months and been pleased so far.

https://midas.investments?p=aff23652

MARY
MARY

What are the fees to transfer out of Midas Investments?