The startup said it made incorrect promotional payments in Bitcoin instead of US dollars and is working to fix the problem, but some recipients have already withdrawn the coins before the company could back down.
BlockFi Inc., a cryptocurrency loan startup, mistakenly sent some Bitcoin users as part of a promotion and is working to reverse it.
The company made what it called incorrect promotional payments to Bitcoin instead of US dollars to certain customers. Although BlockFi worked to reverse them, several recipients withdrew the coins before the company could back down. (It was less than 100, the company said.) The firm’s exposure is about $ 10 million, though that amount decreases as more users return the coins, said Zac Prince, co-founder and CEO of BlockFi.
“BlockFi entails loss reserves as part of its accounting policies and is a fraction of existing loss reserves, so there is no negative impact on equity or ongoing platform operations,” he wrote Prince by email. “The problem that caused the withdrawals has been resolved and incremental guarantees have been developed to prevent any similar problems in the future.”
Wrong deposits have not affected BlockFi’s ongoing operations and the company is reaching record levels of uninterrupted trading volume, he added.
Meanwhile, screenshots of the deposits hovered on social media, with at least one tweet showing a deposit of 700 Bitcoin. Although it has dropped significantly this week, each currency is trading at around $ 34,000 on Wednesday.
Last week, BlockFi tweeted that some participants in the promotion “could see an inaccurate bonus payment in their transaction history.”
Some customers who participated in the March trade promotion may see an inaccurate bonus payment in their transaction history. Our team is working on a solution and the right amounts will be reflected shortly.
– BlockFi (@BlockFi) May 15, 2021
Meanwhile, the company emailed the affected users requesting a refund.
I’m right in thinking that BlockFi had to send $ 701, but sent 701 Bitcoin to that person? 😬 pic.twitter.com/hlFtckSWyA
– Ric Burton @ ‣ 🇺🇸 🦇🔊 (@ricburton) May 19, 2021
BlockFi, perhaps the most visible non-bank cryptocurrency company, offers a range of cryptocurrencies, including loans and mortgages, and manages platforms for trading cryptocurrencies. It has been on the rise as it has grown in recent months amid a crypto-market rally that has unraveled this week.
The snafu of the cryptographic firm recalls the mistake of $ 500 million from Citigroup Inc. last summer when he accidentally sent payments to a group of lenders.
“As a freelancer, it was just a problem,” said Mike Loukas, CEO of TrueMark Investments, of BlockFi. “We always see it with the banks in dollars. But because it is such a volatile asset, the mistake is magnified. “