Is BlockFi Safe? Is it Legit or Scam?
BlockFi was named to Forbes Fintech's list of the top 50 crypto lending companies of 2021. As a crypto startup, BlockFi scored an impressive $ 350 million investment. The lending platform is among the leading wealth managers with an impressive portfolio for first-time traders. Even then, the crypto space has become volatile, a concern that calls for due diligence in the course of transactions.
Even with the full knowledge of a BlockFi and its reputation, the question of the platform's safety is one you can't overlook. If you plan to use BlockFi as a vehicle in your crypto journey, then this article is for you. Here, we review BlockFi's suitability as a crypto lending platform and its safety.
BlockFi currently has over 1 million account holders drawn from all over the world. The company has been in the sector for the last four years and has a present valuation of over $3 billion. As a wealth manager and crypto lending platform, the lender prides itself on building a reputation as a credible broker in the crypto industry over time.
Is BlockFi safe? How is BlockFi Protecting Your money?
According to recent reviews, BlockFi passes the safety test. BlockFi employs a wide range of platform security practices to keep the user safe. The measures aim to prevent rampant fraud cases common in most user platforms.
Users on the platform need to verify their identity before signing in. The platform also has strict two-factor authentication. The safety and security approach further helps keep traders' funds safe.
Further, BlockFi holds all its funds in a cold storage system. The platform currently partners with Gemini in the storage of such funds. Cold storage means that the platform's assets are in a separate system that's not connected to the internet. This helps keep the resources more secure.
Even then, it's important to note that The FDIC or SIPIC doesn't insure Gemini. So far, there haven't been any direct threats to the brokers' funds that would necessitate panic.
How do Governments regulate BlockFi?
Currently, BlockFi is among the few crypto exchange platforms wholly located in the United States. The crypto's custodian, Gemini, is regulated by the New York State Department of Financial Services. BlockFi operates under the official name BlockFi Lending LLC. The company can be used in multiple states in the United States, including Alabama, California, and Colorado.
BlockFi is among the few crypto exchange and lending companies with permission to operate in multiple states. Beyond the United States, the company has a non-U.S. license jurisdiction in Bermuda. The license is a Class F digital business assets license authorized by the Bermuda Monetary Authority. The company operates under the assigned name BlockFi international Ltd in this jurisdiction.
BlockFi, as a crypto exchange and lender, holds a Class F digital assets business license. The class F license is under the Digital Assets Business Act of 2018. The regulations allow BlockFi to undertake the following functions.
Issuing, selling, and redeeming of virtual coins- this includes tokens and any other form of digital assets.
Digital asset exchange- The crypto platform has the license to operate as a digital asset exchange operator.
Custodial Wallet provider- The crypto has the license to provide custodial wallet services in the stated jurisdictions.
Digital Assets Services Vendor - BlockFi has the regulatory privilege to operate as a digital asset provided in the stipulated jurisdictions.
Has BlockFi had Any Security Compromises?
In May 2020, BlockFi suffered one of the most incredible scares to its security infrastructure following a hacking incident. Hackers could infiltrate the system, which resulted in a security threat to personal information. The hackers were able to access millions of users' personal information, emails, addresses, and activity history.
During the incident termed a "sim swap attack," the hackers momentarily took control of the platform's critical information infrastructure. While no funds or loss to personal data was reported during the incident, it was a scare for users on the forum.
BlockFi insists that the platform is now more secure, and all the existing loopholes have since been sealed. The concern, while one-off, raised critical questions about the future of the company's security systems. Interestingly, the attack emanated from the crypto-lending entity's ranks after an employee unintentionally compromised the system.
Can I Use BlockFi In the U.S.?
Over the last few years, there have been new regulations targeting cryptos in the United States. For BlockFi, access to the platform for new users in the United States is now restricted for BlockFi Interest Accounts. In most states in the U.S., BlockFi users can only operate through the Money Service Business platform.
As such, the company currently operates within strict regulations of chapter 151. This means that BlockFi only allows new users in the United States who approach the platform as a currency exchange or money transmission provider.
The crypto lending platform has the authority to exchange and trade in Alabama, California, Colorado, Connecticut, Florida, Georgia, and Iowa. The other States where you can use BlockFi in the United States include Illinois, Kansan, Michigan, and Minnesota.
BlockFi Security Rules
BlockFi's current success is due to the stringent system controls the company has set over the years. First, during the application phase, the user must provide a valid tax I.D., enabling the registration process.
Since the data swipe attempt, the company has further moved towards the future of security. This security program focuses on enhanced safety for the account owners and the platform. Users also need to go through the two-step verification process before login. The steps primarily seek to improve the company's overall security within cyberspace.
The company has further partnered with of Gemini's which is the best providers for wallet infrastructure. This means that client assets are now better managed with high-level additional asset coverage and redundancy systems. The partnership incorporates a unique security model to keep the system safe. One of the best additions to the system is the security testing mechanism.
BlockFi now focuses on conducting periodic penetration testing. The tests allow for constant recommendations on any emergent security issues.
BlockFi Pros and Cons
Before embracing BlockFi as a reliable exchange platform, it's essential to understand the pros and cons that come with the option.
👍 Pros
• U.S. based
BlockFi is among the few crypto-lending platforms that are U.S.-based and regulated.
•Instant Trade
Compared to other crypto exchange options, BlockFi is among the few that offer that instant trade option. You can buy crypto on the go and trade them with the convenience of time.
• Holistic Platform
Users of BlockFi have the chance to enjoy a holistic platform. BlockFi has a unique centralized hub where users can take loans and manage a broad range of operations.
• Comprehensive Help Center
Every trader wants to engage with a crypto exchange provider to offer a comprehensive help center. On BlockFi, this is a guarantee.
👎 Cons
• Not a Good Bargain for Beginners
If you are looking for a place to start your crypto journey, then this may not be the best option for you as a beginner.
• Lacks Video Explainer
The platform doesn't have a visual explanation to guide users. This means that users don't have the luxury to learn through visuals since the platform lacks videos.
•Limited cryptocurrency Options
Unfortunately, BlockFi supports only 13 digital cryptos. The difference is that other competing exchanges have hundreds of cryptos.
Is BlockFi Good for Beginners?
Most reviews have a generally negative perception of BlockFi as a platform designed for beginners. The platform lacks essential features and structures to support the integration needs. As such, the platform is not suitable for beginners. The more seasoned crypto traders would find more meaning when using the platform.
Summary
BlockFi is among the few U.S.-based exchange platform that meets the regulatory threshold to operate in the United States. It works as a cryptocurrency exchange, interest-bearing accounts, and offers low-interest loans globally. The account has become one of the leading crypto exchanges with millions of users. BlockFi further has a security system that includes a two-step authentication and a cold storage system to secure funds.
Beyond the United States, BlockFi also operates in Bermuda. The exchange lender is fully-regulated with a class F digital lender business license. The platform has a holistic system and comprehensive support for the users. The only downside to the lender is that the platform is unsuitable for beginners.
Top 10 BlockFi Reviews
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Comment
I am 100% confident in the reliability of BlockFI. I have been cooperating with it since it was founded in 2017. For all the time, there have never been any security problems, and hackers have not encroached on the platform, since there are no technical vulnerabilities here. I did not find any design flaws, the terminal is typical, but this does not affect its functionality in any way. I travel a lot, so I really appreciate the possibilities for mobile trading. I use the referral program for additional earnings, but I have not reached any investment decisions, although I heard from friends that the rates are profitable.
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Comment
This cryptocurrency exchange is full of newbies and I understand why. This platform has made the conditions as comfortable as possible for those who are just starting their way in the financial markets. I liked the simplified registration and verification, the intuitive terminal, and the high-quality customer service. Support is available 24/7, and there are several channels to communicate with the support team. Technical support is sensible, and all issues are resolved promptly.
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Comment
This crypto exchange has favorable trading conditions, but I came here not for trading or the exchange, but for investing. I learned from a friend that you can earn more money by staking with a freeze of a deposit than by bank deposits. Depending on the type of asset, they pay up to 8% per annum. You can withdraw your money at any time, but you need to understand that in this case, the total amount of payments will be reduced. Interest is paid monthly, and you don't have to wait long. Of the minuses, there are limits for withdrawing funds from the platform and commissions for withdrawing profit.
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Comment
If you are counting on Blockfi, you are clearly in vain! This is a great way to drain money, nothing more. At one time, I hoped for this company, and went bankrupt ...
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Comment
I recently started trading on the crypto market, but my experience is still minimal. For six months, I managed to test 3 exchanges, including BlockF. I stopped on this platform because there are no restrictions on trading strategies, and commissions for trading and exchanging digital currencies are zero. Even beginners will feel comfortable on this site - the registration and verification process takes a minimum of time, and there are no problems. Dealing with the terminal will not be a problem either, since it is simple and straightforward in terms of functionality. My verdict: this exchange is excellent, and you can trust it.
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Comment
BlockFi is a terrible platform. I have applied for a withdrawal of funds. And I received a message that the withdrawal was denied, because I demand to withdraw the bonus money. But this is my money, everything is very easy to check by logs and history in your personal account. Let's see how it all ends. But I will not continue working with BlockFi.
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Comment
As such, I did not find any disadvantages on this platform. This service is ready to be recommended to investors regardless of their experience and financial status. This cryptocurrency exchange offers excellent earning opportunities. I started here with active crypto trading, and then for family reasons I had to temporarily stop. However, even here I decided not to withdraw money. The platform has the ability to freeze the money at an excellent percentage (on an annualized basis up to 4-8%). These are even better conditions than bank deposits.
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Comment
I believe that this company has a customer-centric approach. This can be understood even on the basis of how the commission policy is formed here. For replenishment of the balance, exchange and trade exchange costs are not provided. You only need to pay when you withdraw funds. And then, if you take profit more often than once a day. The disadvantage is the lack of a wide range of assets. Only the main cryptocurrencies are presented, so those people who are looking for "exotic" coins are out of luck.
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Comment
I am neutral towards BlockF, as I have not yet had time to fully assess its pros and cons. At first glance, everything is sensible because it has a typical browser terminal, as well as a mobile application based on it. On the technical side, there are no questions, and the execution of transactions is prompt. Of the clear advantages over many of its competitors is the absence of trading commissions and requirements for the initial deposit. This is an indicator that the cryptocurrency exchange is loyal to newbies.
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Comment
BlockF is not yet at the top of its game because there are not enough digital currencies on this crypto exchange. Compared to its competitors, the company pursues a truly client-oriented policy, there are no commissions for trading, exchange fees for withdrawal are also adequate (and once a day you can withdraw profit for free). For the convenience of its users, a plastic card with cashback for all purchases is provided, as well as a quick exchange service. I do not plan to look for a replacement, my choice was correct.
FAQs
Is BlockFi Safe?
Yes, BlockFi is among the safest options in the market today
Is BlockFi available for United States Users?
Yes, BlockFi is available in most States.
Is BlockFi regulated outside the United States?
Yes, the exchange platform is also regulated in Bermuda
Is BlockFi suitable for Beginners?
No, this platform's design isn't suitable for beginners.
Team that worked on the article
Jason Law is a freelance writer and journalist and a Traders Union website contributor. While his main areas of expertise are currently finance and investing, he’s also a generalist writer covering news, current events, and travel.
Jason’s experience includes being an editor for South24 News and writing for the Vietnam Times newspaper. He is also an avid investor and an active stock and cryptocurrency trader with several years of experience.
Oleg Tkachenko is an economic analyst and risk manager having more than 14 years of experience in working with systemically important banks, investment companies, and analytical platforms. He has been a Traders Union analyst since 2018. His primary specialties are analysis and prediction of price tendencies in the Forex, stock, commodity, and cryptocurrency markets, as well as the development of trading strategies and individual risk management systems. He also analyzes nonstandard investing markets and studies trading psychology.
Mirjan Hipolito is a journalist and news editor at Traders Union. She is an expert crypto writer with five years of experience in the financial markets. Her specialties are daily market news, price predictions, and Initial Coin Offerings (ICO).