Cryptocurrencies

Simply Bitcoin: BlockFi Bailed Out for $250M, Customers Saved?

Posted on by Andrew Packer

The cryptocurrency space has been one of the hardest hit in the latest market selloff. The decline in asset prices has led to a number of liquidity issues for certain crypto brokerages.

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    • Those brokerages that were offering staking services, where they held crypto and lent it out for interest, are in the worst shape. Many are now facing account freezes, forced sales, and even liquidations.

    One such broker is BlockFi. They recently received $250 million in support from broker FTX.

    Customer accounts have yet to see a loss, aside from an account freeze. Yet those who staked cryptocurrencies to earn interest are feeling burned. Crypto lending and staking has likely become a dead issue for potential investors for some time.

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    Meanwhile, other brokers like Voyager and Celsius have likewise had to freeze customer accounts while dealing with liquidity issues.

    Ironically, Bitcoin developed with self-custody in mind. Thus, the recent failures are a sign that investors in crypto need to ensure that they’re storing their own crypto.

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    • Crypto investors who haven’t had their accounts on an exchange frozen yet should look at storing their coins privately. Specifically, while an account freeze may not indicate fraud on behalf of a brokerage, owners aren’t fully in control by leaving their crypto on an exchange.

    To view the full video looking at the collapse of crypto lending and staking, click here.