Anonymous Group Claims BlockFi Facing Solvency Issues Due To BTC Trust Exposure

Anonymous group claims that BlockFi is facing potential insolvency issues

An anonymous group claims that BlockFi is facing potential insolvency issues associated with the negative premium on GBTC shares. The firm currently has more than $1.8 billion in customer assets invested in Grayscale’s GBTC.

The group posted to its website,, to explain the situation. BlockFi promises its investors an annualized interest rate of 6%. But they can only make a profit for their investors if the premium on GBTC shares is above 8%. This is because they have to pay a 2% management fee in addition to the 6% it promises to pay investors.

anonymous group posts on there site ditchblockfi

However, the premium on GBTC shares dropped as low as minus-12% as recently as March 4. While that number has improved since then, it remains in the negative percentile at the time of this writing.

Anonymous Group Accuses BlockFi of Strategies Detrimental

The anonymous group also accused the lending firm of pursuing business strategies detrimental to the interests of its investors. They claim to have been told by “Blockfi investors and institutional borrowers that the crypto lender has over $2 Billion dollars worth of unsecured loans to proprietary trading firms.”

The group believes these unsecured loans “are off-platform, opaque private contracts that are not disclosed on Blockfi’s website or terms of service.” They added that, “Even if these are very successful trading firms, defaults will happen and Blockfi is the central counterparty for every retail depositor as well as every corporate borrower. Since we understand that many of their loans are concentrated, $100M+ sized loans, a single default can easily wipe out Blockfi’s equity base and put them into insolvency.”

Blockfi does state in its terms and conditions that in times of “extreme market conditions” withdrawals may be halted permanently. The group suggested this could have been “built-in for market conditions that would cause their unsecured borrowers to default on their loans. This would cause the firm to be “unable to pay out on deposits.”

The accusations add that since BlockFi isn’t recognized as a bank, it’s “not regulated to hold deposits as a bank”. As such “if there are solvency issues, it will not be bailed out by the U.S. Federal Reserve.”

The group ended its statement by asking other whistleblowers with any information to share to reach out. BlockFi, meanwhile, announced it raised $350 million in a Series D financing round.

BlockFi, Anonymous Group Claims BlockFi Facing Solvency Issues Due To BTC Trust Exposure

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