BlockFi vs. Celsius Network: Reviewing Two Bankrupt Crypto Interest Accounts

2023-9-29 17:30

 BlockFi vs. Celsius Network was a popular head-to-head comparison between cryptocurrency interest accounts.  From 2018 to 2021, both providers were largely considered the blue chips of cryptocurrency interest accounts. 

In June 2022, Celsius Network froze all customer withdrawals and transfers, and declared bankruptcy a month later. In November 2022 BlockFi  blocked all customers from withdrawing their assets due to its complex financial relationship with FTX and FTX affiliate hedge fund Alameda Research November 2022.

Both BlockFi and Celsius failed for different reasons, preventing depositors from withdrawing their funds and dragging them through lengthy bankruptcy proceedings.

The following comparison piece explores BlockFi versus Celsius as they functioned prior to shutting down in 2022.

Celsius. was a  NYC-based company regarded as a cryptocurrency lending and borrowing pioneer. It has raised $93.8M in venture capital, private equity, and an ICO for its native token CEL. Celsius claims it’s “nothing like BlockFi” in a now-deleted blog article.

BlockFi,  a New Jersey-based company raised $508.7M in venture capital from over 30 investors. 

Both BlockFi and Celsius were centralized companies that use decentralized assets, hence being Centralized Finance “CeFi,” rather than Decentralized Finance “DeFi.” Both companies took custody of user’s cryptocurrency. 

So, how did BlockFi and Celsius stack up?

Let’s explore. 

You can read a full breakdown of each individual platform on our BlockFi review, Celsius review, & interviews (2018 and 2020)  with Celsius CEO, Alex Mashinsky, and an overview of the cryptocurrency interest account industry.  

Feature #1: Interest Rates– BlockFi vs. Celsius APY

BlockFi offered 5% on the first 0.5 bitcoin, 2% between 0.5 and 20 BTC, and then 0.5% on any amount over that. 

Celsius offered 6.2% for the first 2 BTC, and then 3.51%. 

Bitcoin APY on Celsius

BlockFi offered 4.5% on 15 Ethereum, 2% between 15 and 1000 ETH, and then 0.5% on any amount over that. 

Celsius offered 5.5% for any amount of Ethereum.

Stablecoins:

BlockFi offered a flat 8.6% on popular stablecoins like USDC and GUSD, and 9.3% on USDT.

BlockFi stablecoin interest account

Celsius offered a flat 8.88% on all stablecoins.

How Did BlockFi and Celsius Make Money?

Neither platform disclosed a full transparent breakdown of its lending strategies, with their logic being to avoid the omnipresent threat of competitors leeching off their strategies. 

On one hand, Celsius Founder Alex Mashinsky would regularly make claims that Celsius is extremely safe and conservative with customer funds, and all of which was found to be false. In a lawsuit against Mashinsky, the New York attorney general claimed Mashinsky defrauded billions of dollars from investors by concealing the true poor health of the company. Mashinsky was arrested in July 2023.

Comically, in a 2019 Celsius blog post,  Mashinsky warned BlockFi customers that BlockFi may use venture capital funds to sustain its interest rates; if the VC money dried up, so would the potential interest rates.

Celsius claimed to lend to cryptocurrency exchanges and hedge funds looking to borrow funds, and it distributes 80% of profits directly to holders of its native token, CEL. 

 Alternatively, BlockFi’s collapse was less due to the same intentional deceipt as Celsius, but rather a complex relationship with FTX and Alameda Research. BlockFi had also ceased all BlockFi Interest Account offers in February 2022, about 9 months before declaring bankruptcy in November 2022. 

Feature #2: Payouts and Withdrawals

BlockFi paid out monthly, while Celsius paid out weekly. 

BlockFi allowed for one free cryptocurrency withdrawal per month, Celsius allowed for unlimited free cryptocurrency withdrawals– that is until they suddenly prevented all of their users from withdrawing their money.

Feature #3: Security– Is BlockFi or Celsius Network Safer?

Technically speaking, both BlockFi and Celsius were structurally safe on paper. Celsius used BitGo’s multi-signature wallets to secure user funds. BitGo has a $100M insurance policy spread over all its clients. BlockFi used Gemini and BitGo as its primary custodians. Both Gemini and BitGo have private insurance on their deposits. 

However, none of this really helped any users retrieve their funds.

Further, neither BlockFi nor Celsius were covered by FDIC insurance. 

Feature #4: Standout Features

Celsius was mobile-only, and BlockFi had both a mobile and web app.

Celsius’s native token CEL rewarded CEL holders with a proportional share of 80% of their profits. International users can also gain an APY boost of around 2%, but this option wasn’t available for U.S. users, who must “Earn in Kind.” 

BlockFi was slowly growing its ecosystem beyond just cryptocurrency lending and borrowing. Its most notable standout feature was its BlockFi Credit Card, which got users 1.5% back in bitcoin on all purchases. 

Bonuses from BlockFi’s credit card landing page The Court of Public Opinion: BlockFi vs. Celsius Reddit

Oof, yeah, you’d be hard-pressed to find anyone with kind words to say about Celsius or its Founder. BlockFi is less-so held in contempt, but both companies are generally viewed as stains on the cryptocurrency industry.

However, during operation, both BlockFi and Celsius had ardent supporter bases, and their comparisons were largely civil. 

One popular Blockfi vs. Celsius Reddit thread on r/BlockFi captured the discourse well: many users leaned towards Celsius for its higher interest rates, others prefered BlockFi’s more conservative lending and investment approaches. A

BlockFi and Celsius Reddit

 

Final Thoughts: BlockFi vs. Celsius

Editor’s note: In June 2022 Celsius Network froze all customer withdrawals and transfers, and declared bankruptcy a month later. We will update this guide as the dust settles. By November 2022, BlockFi had no choice but to block all customers from withdrawing their assets due to its complex financial relationship with FTX and FTX affiliate hedge fund Alameda Research.

The post BlockFi vs. Celsius Network: Reviewing Two Bankrupt Crypto Interest Accounts appeared first on CoinCentral.

Similar to Notcoin - Blum - Airdrops In 2024

origin »

Bitcoin Interest (BCI) íà Currencies.ru

$ 0 (-1.38%)
Îáúåì 24H $0
Èçìåíåèÿ 24h: 0.44 %, 7d: 1.22 %
Cåãîäíÿ L: $0 - H: $0
Êàïèòàëèçàöèÿ $0 Rank 99999
Öåíà â ÷àñ íîâîñòè $ 0.0055889 (-100%)

accounts interest blockfi cryptocurrency celsius network providers

accounts interest → Ðåçóëüòàòîâ: 126


Ôîòî:

Passive Income via Digital Wealth: A Deep Dive Into Crypto Earning, Staking, Interest Bearing Accounts

During the last two years investment vehicles that allow crypto asset holders to gather yields have grown exponentially and anyone can make passive income with a number of avenues. Staking validators, decentralized finance (defi) lending services, and interest rate earning accounts provide digital currency holders with the means to make their money work for them.

2020-8-12 01:15


Chinese crypto startup’s high-interest ads removed from London Underground

A series of adverts for Chinese crypto startup Zeux are being removed from the London Underground. Although, not soon enough, according to the UK’s financial regulatory body, the FCA. ‘Misleading’ 5% interest accounts ads running for over 2 weeks Millions of London commuters (who aren’t eyes down fixated on their smartphones) have been exposed to […] The post Chinese crypto startup’s high-interest ads removed from London Underground appeared first on CryptoSlate.

2020-2-10 18:00


Ôîòî:

Voyager Digital to pay Users Interest on Bitcoin (BTC) Holdings

Voyager Digital (Canada) Ltd. , a leading cryptocurrency broker listed on the Canadian Stock Exchange (CSE: VYGR), has announced the launch of the Voyager Interest Program (VIP), enabling its clients to earn up to three percent interest per annum on their bitcoin (BTC) holdings and five percent on Ethos (ETHOS) token held in their Voyager accounts,Read MoreRead More.

2019-10-23 17:00


Bitcoin IRA Opens Retirement Accounts In Crypto As Retirement Portfolios Reach Record Highs

Bitcoin IRA, the largest Bitcoin retirement platform in the world, informed that investors are currently adding virtual currencies to their retirement portfolios as Bitcoin moves above $11,300. AT the same time, the company mentioned that they have seen more interest in the activity in the last six weeks than in over a year. Bitcoin IRA […]

2019-6-25 22:08


On Collusion

Special thanks to Glen Weyl, Phil Daian and Jinglan Wang for review Over the last few years there has been an increasing interest in using deliberately engineered economic incentives and mechanism design to align behavior of participants in various contexts.

2019-4-5 04:03


A New Bitcoin ETF Hopeful is Many Moons Away, But You Don’t Have to Wait for Bitcoin Interest Accounts Now

The dream of cryptocurrencies replacing bank just got a step closer. This Tuesday BlockFi has launched a crypto deposit account that provides compound interest. The BlockFi Interest Account (BIA) is now live and gives customers an annual interest rate of 6 percent, paid on a monthly basis in cryptocurrency. That monthly interest is then compounded […]

2019-3-7 18:19


Ôîòî:

Blockfi Launches Interest Bearing Savings Accounts for Cryptocurrencies

On March 4, cryptocurrency-backed USD lending platform Blockfi announced the launch of a new savings program called the Blockfi Interest Account (BIA). Having started as a private beta service, BIAs are now available to the public who can store bitcoin core (BTC) and ethereum (ETH) and receive 6 percent annual interest, paid monthly in cryptocurrency.

2019-3-6 23:40