On Thursday, June 16th, the CEO of BlockFi assured BlockFi users that their funds are safe despite the uncertain market conditions, and investors will continue receiving their yields. Investors have raised concerns about BlockFi’s liquidity as the company announced a temporary closure to observe the Juneteenth holiday in three days’ time.
Zac Prince revealed that BlockFi’s management practices allow the company to mitigate risk when necessary. In a situation where clients fail to meet their obligations, the company does not hold back from liquidating assets and issuing margin calls when appropriate.
The CEO also stated that its trading practices and structure does not affect the funds of clients in any way. The company’s risk management practices allow them to operate smoothly, despite turbulent market conditions.
To further strengthen the conviction of BlockFi community members, Zac Prince said:
“We continue to actively lend and operate normally across our global suite of products and services. In fact, we are fulfilling increased demand from institutional borrowers at higher interest rates, similar to rate moves in traditional markets such as the U.S. Treasury yields.”
Terra, Celsius, and 3AC’s Collapse Will Not Affect BlockFi
Zac’s reassurance was necessary to calm investors’ nerves. Before Zac addressed the community, lots of speculations have filled the air about BlockFi’s fund management practices. The crypto ecosystem has recently seen a lot of big protocols taken down in the last few weeks, and fear and doubts dominate the minds of investors.
In May, Terra protocol crashed beyond expectations, and investors were left helpless. In June, the Celsius network faced its greatest challenge since its inception, lack of liquidity as a result of back-to-back losses. Following that, Three Arrows Capital also lost millions of dollars, most owned by investors, as the market dipped in an unprecedented way.
BlockFi’s structure of investing and rewarding investors is similar to that of the Celsius Network, causing investors to wonder what will become of BlockFi in the coming months. Notably, BlockFi reduced its interest rates to investors in May. While several investors were displeased with the company’s decision, it seems to be one of the reasons why BlockFi is still holding on at the moment.