BlockFi threatens legal action after Bitcoin blunder worth millions

Three Bitcoin with wings flying in front of a BlockFi logo

Crypto lender BlockFi could be millions out of pocket after it accidentally deposited large amounts of Bitcoin — in some cases as much as 701 BTC ($27.5 million) — into user accounts.

The erroneous Bitcoin payments were tied to a promotion run by the New York-based firm.

The promotion — if it went to plan — should’ve paid a modest bonus to users holding Gemini’s dollar-backed stablecoin GUSD.

But due to a mix-up with another promotion that ran in March, BlockFi made some of the payouts in Bitcoin rather than GUSD.

  • The March promo promised BTC bonuses on qualifying trades made in the tail-end of the month.
  • Rewards were calculated with the total traded volume (in USD), to be paid by May 31.
  • Some users reported suspiciously large Bitcoin deposits hitting their accounts, starting May 14.
Source: Reddit (one, two).

BlockFi says ‘loss reserves’ will cover it

As screenshots of inflated Bitcoin bonuses flooded social media, a staff member took to Reddit to share more information.

They said fewer than 100 users were credited with Bitcoin which “do not belong to them” and the company was working to recover the crypto.

Over on Twitter, BlockFi chief exec Zac Price attempted to reassure users that — despite the colossal sums — the business was more than equipped to withstand any potential losses.

BlockFi so far hasn’t disclosed how much Bitcoin it sent, but some fast-fingered users were able to withdraw their Bitcoin. However, they quickly received emails.

BlockFi offered a GUSD reward worth between $500 and $1,000 should the Bitcoin be returned.

According to screenshots shared on social media, BlockFi threatened users with legal action if they didn’t pay up.

Protos reached out to BlockFi for comment but at time of publication received no response. 

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