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Why BlockFi Shut Down and the Best 2025 Alternatives
BlockFi was a leading crypto wealth management platform that allowed customers to trade, benefit from high-yield interest accounts, and secure crypto-backed loans. In 2022, the platform filed for bankruptcy and ceased operations, leaving thousands of users needing crypto lending alternatives.
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How BlockFi Became a Major Player in the CeFi Space
They were a major digital asset lender in the centralized finance (CeFi) space.
Catered to retail and institutional investors, they aimed to blend crypto with traditional financial offerings. Their suite of services allowed crypto holders to earn high interest on deposits and secure USD loans backed by their crypto collateral.
Key features offered by the platform included these high-yield interest accounts, zero-fee trading options, and a crypto-rewards credit card. By making crypto assets actively generate passive income and liquidity.
What Led to the BlockFi Platforms' Bankruptcy?
The platform generated revenue by lending these customer funds to institutional borrowers like hedge funds and trading firms using a CeFi model.
A major crisis began when Three Arrows Capital (3AC) defaulted on a large loan, leaving BlockFi with significant debt. Earlier SEC settlements for unregistered securities and false statements, coupled with market turmoil, intensified the company’s problems.
To survive, they secured a $400 million revolving loan from the major cryptocurrency exchange FTX. However, the exchange itself collapsed in November 2022, and they faced a devastating blow. Consequently, the company filed for Chapter 11 bankruptcy, citing $275 million in unpaid debt and substantial exposure to FTX.
The collapse froze user accounts, causing users to lose faith and face a complex process to recover their funds. A court later ruled that customers holding crypto in non-interest-earning wallet accounts legally owned the assets and permitted them to recover $297 million.
Their services were discontinued, leaving other crypto exchanges with lending facilities to fill the gap. Thankfully, we have a perfect alternative for users.
Binance: All-in-One Alternative for Secure Crypto Loans
The Binance platform allows users to secure crypto-backed loans. Users can borrow between 50% and 65% of their digital assets’ value. However, if the value of crypto significantly declines in value, the exchange can elect to sell their lenders collateral to cover the loan.
In addition to providing loans, the platform supports the trading of over 350 cryptocurrencies. The exchange has several advanced trading features, including futures and margin trading, staking, saving, and various cashback and referral rewards programs.
Its core appeal lies in its competitive fee structure, which starts at a low 0.1% for spot trading. Users who hold the exchange’s native asset, Binance Coin (BNB), enjoy further fee discounts.
The platform implements robust security measures like two-factor authentication (2FA) and maintains a Secure Asset Fund for Users (SAFU) to keep client funds safe. The large emergency fund is intended to protect user assets against security breaches. Its mandatory Identity Verification (KYC) allows it to operate in over 180 countries.
The Best Crypto Lending Platforms You Should Consider
The crypto landscape is rich with platforms offering secure trading and highly rewarding passive income programs. If you need liquidity and yield, these crypto lending alternatives stand out as our top choices.
Platform
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Final Thoughts: Is Binance Worth It?
BlockFi was an innovative pioneer in the CeFi-crypto space. However, external market events tragically demonstrated the risks associated with the centralized lending model, and the brand is now defunct and no longer available.
Fortunately, Binance stands out due to its long-standing reputation for robust security, strong regulatory compliance, and a wide array of services. These include providing crypto-backed loans, secure trading, staking for passive income, and deep liquidity. Sign up for the platform now to start benefiting from these features.
BlockFi Frequently Asked Questions
In the United States, it is possible to deduct a maximum of $3,000 in net losses annually by comparing them to other gains from stocks or cryptocurrency.
If you are a client whose claim was scheduled by one or more of the debtors, you would have received an email and first-class mail package from Kroll. It would have contained the information regarding the amount and type of your scheduled claim.
No, the platform is not active. Following its emergence from bankruptcy in 2023, the platform confirmed it would wind down its remaining operations and assets.
