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Gate.io Blog Will BlockFi Be The Next To Fall?

Will BlockFi Be The Next To Fall?

01 July 13:57


[TL; DR]



BlockFi is a complete crypto ecosystem used by seasoned crypto traders.


BlockFi was founded in 2017, with its headquarters in Jersey City, NJ.


BlockFi is a blockchain platform with over 1 million verified users and about $10 billion in assets.


BlockFi allows its patrons to exchange crypto tokens, get low-interest loans, access crypto rewards with credit cards, and open an interest-bearing account.


BlockFi offers the trade and exchange of about 13 digital assets, including Bitcoin, Ethereum, Litecoin, etc.


The BlockFi app or desktop version is easy to use.


You must register as a user and verify your identity with a valid photo ID.


Zac Prince, the CEO of BlockFi, made a conventional statement that the platform has been grossly affected by the crypto market crash.


BlockFi is downsizing its workforce by 20% in response to the crash.


The crash affects other crypto platforms like Crypto.com, Celsius, and Coinbase.


To keep the ship sailing, BlockFi is also reducing its market spending, eliminating non-critical vendors, reducing executive compensations, and a host of other cost-effective strategies.


Keywords: crypto, BlockFi, platform, trading, exchange, assets, token, cryptocurrency.


[Full Article]


The cryptocurrency and blockchain ecosystem is decentralized and open-source. There are no limits to what you can build on the blockchain, and the number of protocols you can create is limitless.


Over the years, developers have built blockchain and cryptocurrency projects that include trading platforms, exchange platforms, Decentralized Finance (Defi) protocols, and others.


In this article, we shall discuss one of the significant cryptocurrency platforms: BlockFi.


Let's begin!



What Is BlockFi?




Image: Greenhouse


BlockFi is a robust cryptocurrency ecosystem used mainly by crypto traders. This blockchain platform has over 1 million verified users and about $10 billion in assets.


BlockFi allows users to exchange crypto tokens and offers low-interest loans, crypto rewards credit cards, and an interest-bearing account where you can earn up to 8% APY.


BlockFi was founded in 2017 and currently has its headquarters in Jersey City, New Jersey. The fundamental mission of BlockFi is to reimagine and expand access to financial services across various locations with little or no traditional banking services.


BlockFi offers 13 digital assets for trading and exchanging with over 800 employees on its platform. The available tokens on BlockFi include Bitcoin (BTC), Chainlink (LINK), Ethereum (ETH), PaxGold (PAXG), Litecoin (LTC), Dai (DAI), US Dollar Coin (USDC), Tether (USDT), and Gemini Dollar (GUSD).


BlockFi provides an online dashboard and mobile apps accessible on Android and iOS.


BlockFi uses cold storage alongside its partner, Gemini, to secure funds and transactions. The cold storage mechanism implies that assets are held in storage not connected to the internet and are more guaranteed because of their offline nature.



How To Use BlockFi




Image: Fox Business


BlockFi is available for desktop and mobile users. The first procedure is to open your BlockFi account.


It is straightforward and similar to opening accounts online. You must provide your personal information like your legal name, address, and country of residence.


After creating your account, you must complete an identity verification process before trading and exchanging crypto tokens on the platform. You can use your photo ID or any valid means of identification for this process.


Desktop users who want to make a simple trade would go to the table at the top of their screen and select which assets they wish to trade. Some users have the BlockFi interest account and can choose to set up recurring trades. The recurring transaction can be set in any order, whether daily, weekly, or monthly.


Generally, the trading experience is straightforward, especially for mobile device users who have been accustomed to using financial apps or online brokerage accounts.


Having identified the basic details about BlockFi and how new and existing users can use the platform, we shall identify some recent events that indicate that the cryptocurrency platform might be heading for a fall.



Is BlockFi About Fall/ Crash?



Zac Prince, the Chief Executive Officer (CEO) of BlockFi, tweeted that the platform has been grossly affected by the "dramatic shift in macroeconomic conditions," which have had a "negative impact" on growth.



Similarly, the Crypto lender is downsizing its staff by 20% due to the dramatic reduction in digital currencies and increased concerns about a weakening economy.


For a company that expanded from 150 employees to about 850 in 2020, you should know that the downturn in cryptocurrency is seriously affecting BlockFi. BlockFi raised over 4957 million since its launch in 2017 and was reported to reach about $5 million in valuation in 2021.


The continued fall in the market value of crypto tokens amidst a sell-off by major investors is putting these trading platforms in "a tight corner." Crypto companies are deploying all ways to cut costs and stay afloat.


The Crypto market’s fall from an all-time high value of $3 trillion to below $1 trillion deals a huge blow to every actor and stakeholder in the cryptocurrency ecosystem.


For instance, the likes of Crypto.com recently announced the layoff of 260 people; Geminin is also downsizing its workforce by 10%. Coinbase has extended its hiring pause and has announced that it will rescind some job offers. Celsius, a crypto lender, has paused all withdrawals and transfers between accounts until further notice.


These companies are the foremost crypto lending and trading platforms with users spread across the globe. However, their fall is imminent if they do not downsize or suspend some of their trading activities until the market returns to its normal phase.


BlockFi is more affected and might fall faster than other crypto platforms because recently, it agreed to pay $50 million to the United States Security and Exchange Commission. BlockFi was fined and is expected to pay the penalty fee.


Similarly, the crypto platform will pay an additional $50 million in fines to 32 states. The fine is concerning BlockFi’s alleged popular interest-bearing crypto accounts. The fine accrued to BlockFi in total is $100 million amidst the bloodbath in the crypto market.



Conclusion




Image: Packy McCormick


The cryptocurrency ecosystem's current situation affects all stakeholders, from traders, holders, and investors to the crypto platforms.


While BlockFi is putting all measures in place, such as reducing marketing spending, eliminating non-critical vendors, reducing executive compensation, and slowing headcount growth, it is expected that the crypto platform will neither fall nor crash.


It was a relief to BlockFi users when Prince, the co-founder of BlockFi, tweeted, "Clients will not experience any material changes to the quality of service they have come to expect, their funds are safeguarded, and all platforms and products continue to operate normally."







Author: Valentine. A, Gate.io Researcher

This article represents only the researcher's views and does not constitute investment suggestions.

Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.

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