Bitcoin Decline: BlockFi on the Verge of Bankruptcy? Sweaty sweat

BlockFi, the next giant to fall? – BlockFi It is a platform Lending CV (Central Finance). This provides its users with a return on cryptocurrency deposits. However, in the face of the general decline in the cryptocurrency markets, you could be in a very bad position. It remains to be seen if BlockFi will join CeFi’s declining list of platforms, such as Celsius where Babylon Finance.

CeFi players are in turmoil

The cryptocurrency market is at the heart of a alcohol market. Bitcoin, Ether, and other cryptocurrencies are dropping significantly.

However, this bear market appears to be very different from previous markets. In fact, the advent of DeFi, and then CeFi, led to the creation of Complex crane parking. Thus, many players in the ecosystem Close to bankruptcyand seeing their leveraged positions perilously close to liquidation.

newly, Celsius And the Babylon Finance they were Obligated to prevent withdrawals on their CeFi platform due to lack of liquidity. Since then, these platforms are somehow trying to avoid filtering.

Unfortunately, this situation does not appear to be specific to these platforms. In fact, it is now Around BlockFi Only to find themselves in a state of turmoil after the publication of classified documents. Note that at the moment it is not possible to validate the authenticity of documents, which are presumably due to a leak.

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BlockFi: Will CeFi’s Next Platform Go Down?

On June 16, netizen @blane9171 to me publishedon Twitter, two BlockFi documents, which would have come from the leak.

One of the leaked BlockFi documents – Source: Twitter

Subsequently, the data from these documents was analyzed by several Internet users, including Tweet embedwho they autopsied in A Twitter theme. Spoiler: It doesn’t smell very good!

“BlockFi’s income statement is really bad. It’s a jumble of negative numbers, so let’s dig it together.”

Tweet from @otteroooo

First, this report shows that BlockFi had an extension Negative operating result Over the past two years with:

  • $63.9 million losses in 2020;
  • $221.5 million losses in 2021.

Remember that in 2020, the price of Bitcoin started at $6000 and reached an all-time high of $69,000 in 2021. So how did BlockFi manage to be so unprofitable in a bull market? »

Tweet from @otteroooo

Another point, meanwhile, is cool in the noon. In fact, according to information collected by @otteroooo, BlockFi has 467 million dollars In its portfolios, for 13.5 billion dollars are usually deposited in its services Lending.

“Does this mean that at the end of 2021, BlockFi only had 3.4% of its funds in its portfolio, with the rest being loaned or invested?”

Tweet from @otteroooo

what’s the problem? As @otteroooo points out, if we assume that all users deposit the same amount, it means that if 1000 customers want to withdraw, only 34 will have access to the funds. The rest will face a lack of cash from BlockFi.

So farYou areonly announced BlockFi No Comment WithdrawalsSome of these competitors have also managed to do so.

Distribution of Returns to Investors: Where Does the Money Come From?

Unfortunately, bad news keeps coming out. Also, according to the same leaked report, BlockFi allegedly distributed a total of 400 million dollars return to its users in 2021.

However, during the same period, the loan proceeds amounted to only $313 million. makes a 87 million dollar hole They are distributed to users without really understanding where they come from, because they don’t come from lending.

In 2020, the hole was 14 million dollars.

“I don’t know if this is the result of a (non-)strategic decision to incur huge losses year on year for market share (20% certain), or whether the CeFi loan business model is a failure (65% certainty), or if BlockFi is completely unqualified. In Basic Mathematics (comments reserved). »

Tweet from @otteroooo

Whether these verses are true or not, IIt’s safer Stay away from CeFi platforms Waiting for the storm to pass. In fact, BlockFi may be the next CeFi service to face bankruptcy risk.

parallel, BlockFi Still in sight American organizers. The platform had to pay a 100 million dollar fine With the US Securities and Exchange Commission in August 2021 against Lack of clarity regarding the nature of its services.

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