Crypto lending startup, BlockFi seems to have bitten more than it can chew in the last few hours with its website being bombarded by crypto users in the hours leading up to press time.
Earlier in the day, the startup announced that it had opened a new service that allows crypto holders to deposit their digital assets and earn a 6% annual interest paid monthly.
Considering the influx of users, it seemed that cryptocurrency investors have long waited for such an offering since deposits could be made in major cryptocurrencies – Bitcoin and Ethereum. Shortly after the announcement, BlockFi reported that it was “seeing an immense amount of volume on (its) website” with some users unable to complete KYC automatically.
How BlockFi’s Interest Account Works
- The BlockFi Interest Account (BIA) allows users to deposit their cryptocurrency holdings with the startup in exchange for earning 6% annual interest paid monthly with a compound interest rate of 6.2%.
- From the app dashboard, users can choose to deposit either Bitcoin (BTC) or Ethereum (ETH).
- The minimum deposit for BIA is 1 BTC or 20 ETH respectively with the option to withdraw at any time.
- Users must complete KYC requirements to gain access to the service.
- According to BlockFi’s CEO Zac Prince, the interest paid to crypto holders on their deposits come from the interest the company receives for providing crypto loans to institutions.
- Interest would still be paid even if the value of bitcoin declines because BlockFi claims to charge institution borrowers more than they pay depositors.
Is BlockFi Insured?
According to Prince, all clients assets are custodied at Gemini, one of the leading digital asset exchanges and custodians in the industry. The crypto exchange is co-founded by the Winklevoss twins and licensed by the New York Department of Financial Services.
BlockFi already has over $10 million worth of asset since they launched the beta version of the BIA earlier this year, according to the CEO.
At the time of writing this report, the company’s website is still down, and we can only hope that their technical team fixes the errors soon enough.