In brief

  • In a promo gone wrong, BlockFi has mistakenly deposited large amounts of Bitcoin to user accounts.
  • The company is now trying to reverse the transactions, reportedly threatening legal action against users who withdrew excessive amounts.

Crypto lending platform BlockFi has confirmed in a statement posted to Reddit that it mistakenly deposited large amounts of Bitcoin to user accounts.

The firm said that the blunder is “likely” related to an ongoing promo campaign that started in March. It offers eligible participants a bonus payment delivered “in one lump sum in GUSD,” a 1:1 dollar-backed stablecoin built by cryptocurrency exchange Gemini.

Instead, some users were paid the amounts in Bitcoin (BTC), with one poster on Reddit claiming that they had been credited with over 700 BTC, or more than $25 million at current prices.

In a post on Reddit, BlockFi explained, “On May 17, 2021, fewer than 100 clients were incorrectly credited with cryptocurrency associated with a promotional payout that did not belong to them.”

BlockFi said the company has contacted the users who were credited with excessive amounts in Bitcoin and is now “working with them to rectify the issue.” The firm insists that “client funds are not impacted and are safeguarded.”

The screwup "does not affect any of BlockFi’s ongoing operations and measures have been taken to ensure that an error like this will not be possible in the future,” said the company’s representative, adding that as of Q1 2021 BlockFi’s publicly reported amount of assets under management was $15 billion.

The situation, however, seems to be more complicated than just May 17, with users reporting instances of incorrect crediting on earlier occasions as well. On May 15, BlockFi tweeted that there was an issue with “inaccurate bonus displayed” on accounts of some users who participated in the promo campaign.

Some BlockFi customers have claimed that the company has threatened legal action if they don’t return the money. One affected client took to Reddit to claim that BlockFi “made those BTC and GUSD deposits to peoples accounts when they should not have. They reversed the BTC deposit and not the GUSD in mine as of yet. I didn't touch those anyway.”

The user claimed that two days after the platform’s accidental crediting of his account, he withdrew USDC which he had deposited a month earlier on a "completely unrelated" occasion. “Now they send me an email accusing me of withdrawing funds that aren't mine saying its fraud and a crime they will act on if not returned in the next 2 hours,” he fumed on Reddit.

There are also reports that BlockFi is offering a reward for the return of funds, with bounties ranging from $500 to $1,000.

Established in 2017 and headquartered in New York, BlockFi raised $350 million in a Series D funding round earlier this year. It was the firm’s largest round to date, and reportedly valued the company at $3 billion.

Decrypt has reached out to BlockFi for further comment and will update the story accordingly.