BlockFi will undergo a liquidity crisis by the end of 2022 (90% certain)
BlockFi has already lost substantial amount of money in 2022 (101% certain)
Here's a thread to investigate & explain wtf is going on with @BlockFi
ππΌ 𧡠π¦¦
BlockFi has already lost substantial amount of money in 2022 (101% certain)
Here's a thread to investigate & explain wtf is going on with @BlockFi
ππΌ 𧡠π¦¦
@BlockFi a. Celsius Fallout
Following CeFi Lender Celsius liquidity issues and assumed restructuring, users of other CeFi Lenders have been spooked
Having seen the pain that stuck Celsius users are going through, users are withdrawing coins, forsaking the yield from CeFi Lenders
Following CeFi Lender Celsius liquidity issues and assumed restructuring, users of other CeFi Lenders have been spooked
Having seen the pain that stuck Celsius users are going through, users are withdrawing coins, forsaking the yield from CeFi Lenders
@BlockFi After all, recall in otter's previous threads that an impending liquidity crisis is a reverse game of chicken.
This seems to be what BlockFi will grapple with soon, if it hasn't already happene.
This seems to be what BlockFi will grapple with soon, if it hasn't already happene.
@BlockFi b. 3AC fallout
Three Arrows Capital is a HUGE crypto hedge fund, which spectacularly blew up over the past few days
People who have lent 3AC funds have found it impossible to get their money back
Here is 3AC co-founder basically admitting insolvency
Three Arrows Capital is a HUGE crypto hedge fund, which spectacularly blew up over the past few days
People who have lent 3AC funds have found it impossible to get their money back
Here is 3AC co-founder basically admitting insolvency
@BlockFi How 3AC works is they would borrow funds from crypto-rich firms like CeFi Lenders, then make bets in the market
Basically gamble on borrowed funds
Its troublesome to go to every single decentralized crypto holder to borrow funds individually
So 3AC borrowed from CeFi Lenders
Basically gamble on borrowed funds
Its troublesome to go to every single decentralized crypto holder to borrow funds individually
So 3AC borrowed from CeFi Lenders
@BlockFi But when those bets (gambles) go wrong, the hedge fund can't repay its loans
Here you can read a sob story of someone who could not get funds back from 3AC
πππ
Here you can read a sob story of someone who could not get funds back from 3AC
πππ
@BlockFi A borrow-to-gamble business model works when the bets are correct, but spiral badly when things go wrong
When 3AC became insolvent, it could no longer repay back its loans to every company who lent it funds
Here's where BlockFi comes in
When 3AC became insolvent, it could no longer repay back its loans to every company who lent it funds
Here's where BlockFi comes in
@BlockFi When questioned if BlockFi has any exposure (lent users' cryptos) to 3AC, this is the response
@BlockFi One could guess that they probably stuck to this dumb policy because they knew if the truth was out, the fallout will be way worse
From this response, otter guesses that, BlockFi has lent users' funds to 3AC and can no longer get it back (90% certain)
no bueno π¦¦
From this response, otter guesses that, BlockFi has lent users' funds to 3AC and can no longer get it back (90% certain)
no bueno π¦¦
@BlockFi c. BlockFi own stupid bets in the market
BlockFi is the second largest holder of GBTC, 3AC being the largest holder
Grayscale Bitcoin Trust (GBTC) is a tradfi (traditional finance) product
When BTC was pumping hard, tradfi investors could not figure out how to buy Bitcoin..
BlockFi is the second largest holder of GBTC, 3AC being the largest holder
Grayscale Bitcoin Trust (GBTC) is a tradfi (traditional finance) product
When BTC was pumping hard, tradfi investors could not figure out how to buy Bitcoin..
@BlockFi ... so tradfi investors FOMO bought up GBTC via stock brokers
At the height of mania, 1 BTC = 1.36 GBTC
It was an arbitrage opportunity
A holder of BTC could put 1 BTC into the trust and get back 1.36 GBTC shares; bring it back to parity and make up to 36% along the way
At the height of mania, 1 BTC = 1.36 GBTC
It was an arbitrage opportunity
A holder of BTC could put 1 BTC into the trust and get back 1.36 GBTC shares; bring it back to parity and make up to 36% along the way
@BlockFi Only one small issue remains, GBTC is a BTC black hole
Since it was a tradfi product, it was regulated by the SEC
The SEC allowed BTC to be put into the trust in exchange for GBTC, but not to redeem the BTC out of the Trust by returning GBTC
GBTC is a one way street
Since it was a tradfi product, it was regulated by the SEC
The SEC allowed BTC to be put into the trust in exchange for GBTC, but not to redeem the BTC out of the Trust by returning GBTC
GBTC is a one way street
@BlockFi GBTC has to change to another form of tradfi product before redemptions of the BTC in this Trust was allowed
Repeated lobbying to the SEC got nowhere
Interestingly, one of the reasons the SEC gave was @Tether_to manipulation of market
(Thread for another day)
Repeated lobbying to the SEC got nowhere
Interestingly, one of the reasons the SEC gave was @Tether_to manipulation of market
(Thread for another day)
@BlockFi @Tether_to So the only ways out of GBTC are:
1. Sell GBTC to someone else now
2. Wait for SEC to finally change their mind, for GBTC to change to a spot ETF that allows redemption of the BTC stuck in the Trust
both are...
no bueno π¦¦
1. Sell GBTC to someone else now
2. Wait for SEC to finally change their mind, for GBTC to change to a spot ETF that allows redemption of the BTC stuck in the Trust
both are...
no bueno π¦¦
@BlockFi @Tether_to 1. Sell GBTC to someone else now
There is a huge discount for GBTC
Selling GBTC now will only get you back ~71% of the BTC
This is because:
i. users realized that the SEC is resolute in its decision
ii. a discount for the illiquidity
iii. many other ways for people to buy BTC
There is a huge discount for GBTC
Selling GBTC now will only get you back ~71% of the BTC
This is because:
i. users realized that the SEC is resolute in its decision
ii. a discount for the illiquidity
iii. many other ways for people to buy BTC
@BlockFi @Tether_to 2. Wait for SEC to change their decision
Well, this is a pretty good option if you have time. In fighting a liquidity crisis, TIME is the one thing that CeFi lending firms do not have
Users want their coins withdrawn today, not tomorrow, not when, if ever SEC changes their mind
Well, this is a pretty good option if you have time. In fighting a liquidity crisis, TIME is the one thing that CeFi lending firms do not have
Users want their coins withdrawn today, not tomorrow, not when, if ever SEC changes their mind
@BlockFi @Tether_to Recall that BlockFi is heavily invested into GBTC with clients' funds
Users want out NOW. Option 2 of waiting is no longer available
So what did #BlockFi do?
They sold their GBTC for BTC, taking a further loss on users' funds
Users want out NOW. Option 2 of waiting is no longer available
So what did #BlockFi do?
They sold their GBTC for BTC, taking a further loss on users' funds
@BlockFi @Tether_to In effect, BlockFi took a gamble and lost
A gamble that they would not get a liquidity crisis until SEC relented and changed their decision
Unfortunately for BlockFi and her users, the liquidity crisis was brought on by LUNA/UST depegging, Celsius liquidity issues etc.
A gamble that they would not get a liquidity crisis until SEC relented and changed their decision
Unfortunately for BlockFi and her users, the liquidity crisis was brought on by LUNA/UST depegging, Celsius liquidity issues etc.
@BlockFi @Tether_to By the way, otter has called EVERY SINGLE crypto explosion in 2022 *BEFORE* they happened
This is what otters do!
An otter is always vigilant, standing watch for predators that could harm the rest of the family
Verify my claims in otter's pinned post
This is what otters do!
An otter is always vigilant, standing watch for predators that could harm the rest of the family
Verify my claims in otter's pinned post
@BlockFi @Tether_to So back to BlockFi
BlockFi business model is in jeopardy as we've seen with Celsius
BlockFi probably lent big money to a hedge fund that blew up spectacularly
BlockFi gambled that SEC would change their mind before a liquidity crisis and got that wrong
It gets worse..
BlockFi business model is in jeopardy as we've seen with Celsius
BlockFi probably lent big money to a hedge fund that blew up spectacularly
BlockFi gambled that SEC would change their mind before a liquidity crisis and got that wrong
It gets worse..
@BlockFi @Tether_to Just this year, BlockFi failed to register the offers and sales of its retail crypto lending product and got charged by the SEC and others
The settlement with the SEC was... US$100,000,000
That's a f*ck ton of money to lose
no bueno π¦¦π¦¦
The settlement with the SEC was... US$100,000,000
That's a f*ck ton of money to lose
no bueno π¦¦π¦¦
@BlockFi @Tether_to Another $943,000 settlement payment from BlockFi to Iowa announced today
What's interesting is that BlockFi is paying this smallish amount in installments
You know who pays in installments? People who have no money on hand, also known as liquidity crisis
no bueno π¦¦π¦¦
What's interesting is that BlockFi is paying this smallish amount in installments
You know who pays in installments? People who have no money on hand, also known as liquidity crisis
no bueno π¦¦π¦¦
@BlockFi @Tether_to If for some reason you still have your coins in BlockFi, ask yourself this
After having their funds stuck in GBTC, not being able to recall their loans to 3AC, losing $100m to settle with SEC all in 2022 alone
and with most rushing to withdraw their funds...
...why aren't you?
After having their funds stuck in GBTC, not being able to recall their loans to 3AC, losing $100m to settle with SEC all in 2022 alone
and with most rushing to withdraw their funds...
...why aren't you?
@BlockFi @Tether_to Yes, they may have honoured all past redemptions, but this time is truly different
A company is not a sports team. You do not have to feel strongly for them just because they are familiar to you
Stop and think critically before you reply in otter's thread to defend them
A company is not a sports team. You do not have to feel strongly for them just because they are familiar to you
Stop and think critically before you reply in otter's thread to defend them
@BlockFi @Tether_to Otter has also heard some rumours. Take note that the following has not been substantiated, so read them with a pinch of salt.
On 7 June 2022, BlockFi fundraising was leaked to the press
Valuation of BlockFi sunk from $3bn to $1bn from the previous funding round
On 7 June 2022, BlockFi fundraising was leaked to the press
Valuation of BlockFi sunk from $3bn to $1bn from the previous funding round
@BlockFi @Tether_to Otter heard from unverified sources that only $50-80m has been committed so far for the current funding round
Multiple investors who were approached for the deal were spooked by revenue figures
and this was BEFORE Celsius crash
$80m is not even enough to cover the SEC payment
Multiple investors who were approached for the deal were spooked by revenue figures
and this was BEFORE Celsius crash
$80m is not even enough to cover the SEC payment
@BlockFi @Tether_to So what's next for BlockFi facing a liquidity crisis? (90% certain)
Here are 5 common tactics
1. stall for time
Find any excuse, legitimate or otherwise, to slow the withdrawals
BlockFi did that
I guess blockchains are closed on US holidays..
π€·πΌββοΈπ€·πΌββοΈπ€·πΌββοΈ
Here are 5 common tactics
1. stall for time
Find any excuse, legitimate or otherwise, to slow the withdrawals
BlockFi did that
I guess blockchains are closed on US holidays..
π€·πΌββοΈπ€·πΌββοΈπ€·πΌββοΈ
@BlockFi @Tether_to 2. change the terms & conditions to favour the company at the expense of users before illiquidity is exposed
Notice that the article was edited/published on 15 June 2022, but if you read through the article, all the dates reference 31 March 2022!
Notice that the article was edited/published on 15 June 2022, but if you read through the article, all the dates reference 31 March 2022!
@BlockFi @Tether_to This may be due to BlockFi...
i. not wanting to expose the extent of loss in their books post 31 March 2022
ii. not having done a quarterly report for Q2 2022
Either way, the article is using a Bitcoin price of $45,528. LOL
help.blockfi.com
i. not wanting to expose the extent of loss in their books post 31 March 2022
ii. not having done a quarterly report for Q2 2022
Either way, the article is using a Bitcoin price of $45,528. LOL
help.blockfi.com
@BlockFi @Tether_to Now is probably a good time to look at the Terms & Conditions a BlockFi user has agreed, by using BlockFi services
no bueno π¦¦π¦¦
no bueno π¦¦π¦¦
@BlockFi @Tether_to 3. cut cost
Because now every $ matters
In fact, they have already done so by cutting what is usually the most costly expense in a crypto startup - manpower
Because now every $ matters
In fact, they have already done so by cutting what is usually the most costly expense in a crypto startup - manpower
@BlockFi @Tether_to 4. coincidental tech issues
The platform will break in ways that coincidentally not allow you to withdraw
"What bad timing!"
Technical reasons, KYC reasons, whatever reason to stop the outflow of money
The platform will break in ways that coincidentally not allow you to withdraw
"What bad timing!"
Technical reasons, KYC reasons, whatever reason to stop the outflow of money
@BlockFi @Tether_to 5. obfuscate investigators
Otters like me are genuinely concerned for everyone's funds making it out safe
I spend time and effort late into the night to dig out fishy matters
It takes so long because of half truths and confusing language!
Otters like me are genuinely concerned for everyone's funds making it out safe
I spend time and effort late into the night to dig out fishy matters
It takes so long because of half truths and confusing language!
@BlockFi @Tether_to Saving everyones coins from risky CeFi Lenders, who puts users' funds into hedge funds, that gambles more than hedges... is an uphill battle
Please join otter in saving as many friends from a possible Celsius Armageddon 2.0
TIME is ticking. Reshare the first tweet in the thread
Please join otter in saving as many friends from a possible Celsius Armageddon 2.0
TIME is ticking. Reshare the first tweet in the thread
@BlockFi @Tether_to Special thanks to the following people whose work I have referenced
@BlockFiZac
@yeezuscapital
@PopMelancholic
@packssmacks
@brosbalena
@cryptadamist
@Cointelegraph
@0xSloke
@Deesontralize
@cakeslice_dev
@hodlkyptonite
@danheld
@bigtimecali
@0xbuidlhodl
Share & Retweet π¦¦
@BlockFiZac
@yeezuscapital
@PopMelancholic
@packssmacks
@brosbalena
@cryptadamist
@Cointelegraph
@0xSloke
@Deesontralize
@cakeslice_dev
@hodlkyptonite
@danheld
@bigtimecali
@0xbuidlhodl
Share & Retweet π¦¦
@BlockFi @Tether_to @BlockFiZac @yeezuscapital @PopMelancholic @packssmacks @BrosBalena @Cryptadamist @Cointelegraph @0xSloke @Deesontralize @cakeslice_dev @danheld @BigTimeCali @0xBUIDLHODL You can read the unrolled version of this thread here: typefully.com
seems like you love otter's threads! a 100 likes and counting π³
keep the thank you DMs coming in
this is why i do this, to warn everyone if/when disaster strikes!
take care out there all!
keep the thank you DMs coming in
this is why i do this, to warn everyone if/when disaster strikes!
take care out there all!
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