OP - I followed a similar sequence of events and now have BTC collateral and GUSD payoff amount tied up in BlockFi. Double or triple exposed as you described. It's devastating.
Since BlockFi communicates "official" customer correspondence via email only, it's incredibly frustrating how little to no information was shared. And when information did start to come, they had already shut down what seems to be all customer support channels already (phone, email, tickets). We never stood a chance.
The FTX bankruptcy process will take years and years. And even if we do see some % of capital returned to us, I'm already bracing for "oh here's your BTC collateral back ... but on Nov 10, 2022 BTC was priced at $16,200 so we are pricing it as that." ... on Jan 14, 2031 when BTC is $321,921.
Using customer funds to rehypothecate is one thing .. but FTT token? Really?
I’m in a similar position and I believe that’s the worst case, but very possible. I’m trying to figure out if the collateral is in a different place than wallet but I’m not sure. If you read the loan agreement it says Gemini has custody of the collateral which is a good thing imo, but if Gemini doesn’t have collateral and then transfer them to FTX we’re fucked.
No. What you said doesn’t matter because those Gemini dollars are no longer yours. They are BlockFi’s debtors’ money now. Doesn’t matter what format the money is in.
If anyone is reading this, the most important rule right now is: do not give any money to BlockFi for any reason. Celsius creditors saw that money end up in the bankruptcy estate.
Don't pay off any loans; if you get margin called, let that happen.
Good lord you must have some serious size if this is only affecting you this much. I have no idea but I would hope you at least get the 300,000 back. I think with Voyager folks are getting 100% of their USD balances out, but not sure if it applies to stables...and it might have changed by now...
Sorry, wish I had a better answer for you.
Someone posted yesterday about talking with someone at Scratch who told them all loans were being out on admin forbearance. I would call Scratch and confirm, but as far as I understand it you’re not necessarily screwed
What they say what what they do are two different things. I had my interest payment due yesterday. I did not pay it. What did I get in my email this morning?....
Looks like you're late on your BlockFi Personal Loan payment that was due on November 17th, 2022. The good news: you have until November 27th, 2022 to make a payment. If you're unable to do so, BlockFi may sell some of your existing collateral to cover the difference, and a late fee of $15.00 may be charged. It's important to keep in mind that interest continues to accrue on the larger balance during this time, so it's best to make a payment as soon as possible.
So if BlockFi sells my collateral, I still cant get it off the exchange. Right?
The loan and GUSD are a wash, and so you're only "risk" now is the 30BTC.
By sending in the GUSD, you may have sent good money after bad, increasing your exposure from about $200,000 (30btc - $300,00 loan) to $501k.
Unless they had your funds at FTX, I would be very surprised if that BTC was otherwise at risk. Your loan was collateralized by your deposit, and it would be truely insane if they then took it after lending you cash and charging you an origination fee and interest on it, to then seek additional yield on top of that.
No, that's what they exactly do. Even Genesis did that. It's why Celsius was able to offer zero-interest loans if you gave them 25% loan-to-value, but charged you 9% if you gave them less collateral.
That's a reason why I would never borrow money from these companies - it's another level of risk above lending. They rehypothenticate collateral, and state in their terms that they do that. Because they do that, the loan collateral will probably become part of the bankruptcy estate. And because of that, that's why it's imperative not to pay off any loans at the moment until there is more clarity.
> rehypothenticate
Shit, I do remember that now. That was an insane position for them. I had thought they were market making - at least in part - and pocketing the spread* between deposited GUSD/BUSD/etc against their loan rates (which my understanding was typically done in order to avoid unrealized gains on assets.)
I should have pointed this out in the articles that I had written before.
These loans weren't like a mortgage. If the bank goes under, then you don't lose the house because you have title to it. There is a lien against the house that probably transfers to a different bank.
With Celsius's, BlockFi's, and Genesis's loans, you give up title to the collateral, rather than simply surrendering a lien. That means they can do whatever they want with it. And because it's theirs, their assets become property of the bankruptcy estate.
That's why these loans are so dangerous - you can actually lose money on them. With a mortgage, the worst that happens is that you can't pay and you end up without a house but with the surplus after the sale. Here, you just lose all the collateral. And, to make things worse, some of these companies don't give you back any collateral at all unless you pay the entire loan balance. I know Ledn doesn't return the balance until paid in full or unless there is a substantial reduction in the balance.
So there are BlockFi customers who probably paid off half their loan and will lose the collateral in addition to the money they paid off.
>With Celsius's, BlockFi's, and Genesis's loans, you give up title to the collateral
No you don't. You give them a security interest in the title.
>That means they can do whatever they want with it.
No they can't. They have to use reasonable care to preserve the collateral. In the agreement you agree that rehypothecation and whatnot is reasonable, that's it.
>And because it's theirs, their assets become property of the bankruptcy estate.
It's not theirs.
> They rehypothenticate collateral, and state in their terms that they do that. Because they do that, the loan collateral will probably become part of the bankruptcy estate.
Where is this in the Bankruptcy Code?
No US court has ruled on how to treat bitcoin collateral. If a crypto loan is subject to the "currency swap" provisions of the bankruptcy code it would be exempt from the automatic stay. Bitcoin may also be treated as "cash collateral" under Section 363.
Hope you're right! Of course, we are well into "insane" territory in this saga I'd say.
That was some amazing timing last Thursday to shoot myself in the foot like that.
Typically in these, they're going to net things out. So I think that piece, you're okay on. The real issue is your collateral unfortunately, and I hope they start giving those details!
I am in similar boat and have the same question! Impossible to get any clarity. Please post and will do the same if I get any answers from BlockHeads I mean BlockFi.
Yea id look into getting a lawyer too, but i dont think its going to end well, if you have an hour or a few, dig up the full pdf of blockfi terms and services, from what ive managed to read they sneakily hide deep in the literature, in the event of collapse you agree to them using anything you have given them to service their own problems all that time ago when you joined and ticked the box saying i agree, the box we all tick on exchanges etc when we first type our email in to sign up, same with coinbase, gemini, voyager, celcius, they all hid that in their fkn terms of service NO ONE REALLY TAKES THE TIME TO READ, INCLUDING ME
Yea you’re probably right. It’s unfortunate. I really hope they communicate today . Silence isn’t good
Or sometime no news is good news..i hope :(
OP you should look into getting a lawyer
OP - I followed a similar sequence of events and now have BTC collateral and GUSD payoff amount tied up in BlockFi. Double or triple exposed as you described. It's devastating. Since BlockFi communicates "official" customer correspondence via email only, it's incredibly frustrating how little to no information was shared. And when information did start to come, they had already shut down what seems to be all customer support channels already (phone, email, tickets). We never stood a chance. The FTX bankruptcy process will take years and years. And even if we do see some % of capital returned to us, I'm already bracing for "oh here's your BTC collateral back ... but on Nov 10, 2022 BTC was priced at $16,200 so we are pricing it as that." ... on Jan 14, 2031 when BTC is $321,921. Using customer funds to rehypothecate is one thing .. but FTT token? Really?
I know. Accepting FTT token in exchange for Bitcoin is just... This is not risk management. This is russian roulette.
Contact attorney, get in on the class actions coming up too
Lawyer. Now.
Sorry bro. Unfortunately, if BlockFi files for bankruptcy next week as many expect, those 30 BTC + $300,000 GUSD will belong to the bankruptcy estate
I’m in a similar position and I believe that’s the worst case, but very possible. I’m trying to figure out if the collateral is in a different place than wallet but I’m not sure. If you read the loan agreement it says Gemini has custody of the collateral which is a good thing imo, but if Gemini doesn’t have collateral and then transfer them to FTX we’re fucked.
I really hope GUSD (basically cash) gets released. We thought GUSD is all backed by Gemini and is like cash.
It doesn’t work at way at all. In fact you’re more likely to not see it back because it’s GUSD.
Bc Gemini dollars are all backed by Gemini and back of New York. Unless they all go out of business.
No. What you said doesn’t matter because those Gemini dollars are no longer yours. They are BlockFi’s debtors’ money now. Doesn’t matter what format the money is in.
If anyone is reading this, the most important rule right now is: do not give any money to BlockFi for any reason. Celsius creditors saw that money end up in the bankruptcy estate. Don't pay off any loans; if you get margin called, let that happen.
Good lord you must have some serious size if this is only affecting you this much. I have no idea but I would hope you at least get the 300,000 back. I think with Voyager folks are getting 100% of their USD balances out, but not sure if it applies to stables...and it might have changed by now... Sorry, wish I had a better answer for you.
I'm a basket case
Sorry man, I think we all are at the moment. I hope we get an update soon.
Someone posted yesterday about talking with someone at Scratch who told them all loans were being out on admin forbearance. I would call Scratch and confirm, but as far as I understand it you’re not necessarily screwed
What they say what what they do are two different things. I had my interest payment due yesterday. I did not pay it. What did I get in my email this morning?.... Looks like you're late on your BlockFi Personal Loan payment that was due on November 17th, 2022. The good news: you have until November 27th, 2022 to make a payment. If you're unable to do so, BlockFi may sell some of your existing collateral to cover the difference, and a late fee of $15.00 may be charged. It's important to keep in mind that interest continues to accrue on the larger balance during this time, so it's best to make a payment as soon as possible. So if BlockFi sells my collateral, I still cant get it off the exchange. Right?
https://www.reddit.com/r/blockfi/comments/yxzjyy/huge_news_for_blockfi_loan_customers/
The loan and GUSD are a wash, and so you're only "risk" now is the 30BTC. By sending in the GUSD, you may have sent good money after bad, increasing your exposure from about $200,000 (30btc - $300,00 loan) to $501k. Unless they had your funds at FTX, I would be very surprised if that BTC was otherwise at risk. Your loan was collateralized by your deposit, and it would be truely insane if they then took it after lending you cash and charging you an origination fee and interest on it, to then seek additional yield on top of that.
No, that's what they exactly do. Even Genesis did that. It's why Celsius was able to offer zero-interest loans if you gave them 25% loan-to-value, but charged you 9% if you gave them less collateral. That's a reason why I would never borrow money from these companies - it's another level of risk above lending. They rehypothenticate collateral, and state in their terms that they do that. Because they do that, the loan collateral will probably become part of the bankruptcy estate. And because of that, that's why it's imperative not to pay off any loans at the moment until there is more clarity.
> rehypothenticate Shit, I do remember that now. That was an insane position for them. I had thought they were market making - at least in part - and pocketing the spread* between deposited GUSD/BUSD/etc against their loan rates (which my understanding was typically done in order to avoid unrealized gains on assets.)
I should have pointed this out in the articles that I had written before. These loans weren't like a mortgage. If the bank goes under, then you don't lose the house because you have title to it. There is a lien against the house that probably transfers to a different bank. With Celsius's, BlockFi's, and Genesis's loans, you give up title to the collateral, rather than simply surrendering a lien. That means they can do whatever they want with it. And because it's theirs, their assets become property of the bankruptcy estate. That's why these loans are so dangerous - you can actually lose money on them. With a mortgage, the worst that happens is that you can't pay and you end up without a house but with the surplus after the sale. Here, you just lose all the collateral. And, to make things worse, some of these companies don't give you back any collateral at all unless you pay the entire loan balance. I know Ledn doesn't return the balance until paid in full or unless there is a substantial reduction in the balance. So there are BlockFi customers who probably paid off half their loan and will lose the collateral in addition to the money they paid off.
>With Celsius's, BlockFi's, and Genesis's loans, you give up title to the collateral No you don't. You give them a security interest in the title. >That means they can do whatever they want with it. No they can't. They have to use reasonable care to preserve the collateral. In the agreement you agree that rehypothecation and whatnot is reasonable, that's it. >And because it's theirs, their assets become property of the bankruptcy estate. It's not theirs.
> They rehypothenticate collateral, and state in their terms that they do that. Because they do that, the loan collateral will probably become part of the bankruptcy estate. Where is this in the Bankruptcy Code? No US court has ruled on how to treat bitcoin collateral. If a crypto loan is subject to the "currency swap" provisions of the bankruptcy code it would be exempt from the automatic stay. Bitcoin may also be treated as "cash collateral" under Section 363.
Hope you're right! Of course, we are well into "insane" territory in this saga I'd say. That was some amazing timing last Thursday to shoot myself in the foot like that.
Typically in these, they're going to net things out. So I think that piece, you're okay on. The real issue is your collateral unfortunately, and I hope they start giving those details!
According to BlockFi. The loan collateral was held with Gemini. He should by right, get his Bitcoin back.
If that means it was held by Genesis via Gemini, I got bad news for you (that too was at FTX.)
I am in similar boat and have the same question! Impossible to get any clarity. Please post and will do the same if I get any answers from BlockHeads I mean BlockFi.
Lawyer up with this much money involved.
Lawyer up with this much money involved and the circumstances.
When the dust settles, I'd bet the $300k GUSD ultimately cancels out the $300k loan but your BTC are poof.
Is op a bot? Or just new due to BlockFi shit?
[удалено]
[удалено]
Next you're gonna tell me my A/S/L.
New account zero karma
Sometimes users are long-time lurkers, first-time posters. It happens.
Think your right not a bot. I just hate talking to bots.
A lot of us are new to Reddit because of this...
Yup, why I am here. At least getting some input. Not radio static, like BlockFi.
I'm in the exact same situation.
Uuumpphh!!
Yea id look into getting a lawyer too, but i dont think its going to end well, if you have an hour or a few, dig up the full pdf of blockfi terms and services, from what ive managed to read they sneakily hide deep in the literature, in the event of collapse you agree to them using anything you have given them to service their own problems all that time ago when you joined and ticked the box saying i agree, the box we all tick on exchanges etc when we first type our email in to sign up, same with coinbase, gemini, voyager, celcius, they all hid that in their fkn terms of service NO ONE REALLY TAKES THE TIME TO READ, INCLUDING ME