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K Shah's avatar

Packy, what about the risk of fraud on the stable coins? How do you actually know that BlockFi has one USD in reserve for each stable coin they've created? Are they audited by someone reputable? Tether and Bitfinex are 100% a scam and banned in NY for that reason. Additionally, I'm not sure how big the bitcoin arbitrage trade is. CME bitcoin futures are cash settled and there is no physical delivery, which limits the trade - it is not a true arbitrage. Plus, I don't know of any reputable hedge funds or banks that trade crypto.

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Austin Rendell's avatar

Packy - great article. Why risk my BTC principle just to get a 6% return? Sure they’ve had 0% loan loss, but they’ve only been doing this for a year (I think that’s right but could very well be wrong) - I would hope they would have a 0% loan loss. But no doubt they will lose principle in the future. Only difference is that a bank is insured and is regulated - we have no idea what exposure or how much leverage a company like Blockfi has outstanding.

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