BlockFi mistakenly credits users with too much Bitcoin in promo payout

Just under 100 BlockFi users are reported to be affected, with some allegedly receiving as many as 700 Bitcoin due to a mishandled promotional offer.

Crypto promotional schemes are old hat in the industry, with many businesses trying to secure customer loyalty through a range of perks and mini handouts.

For BlockFi, however, its latest promotional offer has gone topsy turvy, after the platform mistakenly paid out oversized rewards in Bitcoin (BTC). One BlockFi user allegedly received a staggering 701.4 BTC on May 14.

Under the terms of the original giveaway, BlockFi had offered Bitcoin rewards for clients trading a set volume in U.S. dollars between March 18 and 31. With rewards due to be credited to accounts by May 31, BlockFi warned users already on May 14:

Some clients who participated in the March trading promotion may see an inaccurate bonus payment displayed in their transaction history. Our team is working on a fix and the proper amounts will be reflected shortly.

— BlockFi (@BlockFi) May 15, 2021

Just under 100 clients are thought to be affected, according to a BlockFi representative. Yet a small furor over the exchange’s allegedly threatening tone to clients who don’t comply instantly with its directives to return the funds has already erupted on social media.

One user has reportedly posted a photograph of an email allegedly from BlockFi notifying him/her that “failure to return the erroneously received assets by 5.00 PM EDT today (May 18th, 2021) may constitute a crime and will result in BlockFi taking legal action.” The company has also offered clients a $500 payout in Gemini Dollars (GUSD) as compensation for “any trouble this may have caused.” 

Another Reddit user in the r/blockfi thread has alleged that “2 days after their blunder, I made a withdrawal of USDC which I had deposited a month earlier. Completely unrelated to their claim. Now they send me an email accusing me of withdrawing funds that aren’t mine saying its fraud and a crime they will act on if not returned in the next 2 hours.”

The user continued to criticize the platform, claiming that BlockFi “can’t even look through the records to verify what they are talking about. My account with them is only one month old.” “Great way to treat a new customer,” the user wrote.

In its official statement on Reddit, BlockFi has tried to reassure customers by noting:

“The situation does not affect any of BlockFi’s ongoing operations and measures have been taken to ensure that an error like this will not be possible in the future. BlockFi’s latest publicly reported AUM is $15B as of Q1 2021. Client funds are not impacted and are safeguarded.”

In March of this year, BlockFi had raised $350 million in a series D funding round led by Bain Capital Ventures, Pomp Investments, Tiger Global and partners of DST Global. The company was valued at $3 billion.

With rumors and users’ allegations continuing to circulate online, BlockFi has yet to release an official statement clarifying what happened exactly. On Twitter, BlockFi CEO Zac Prince has recently posted that the amounts are, on the company’s account, not as high as some users have been alleging:

No- we mistakenly credited a bunch of BTC in accounts but only sent a couple hundred BTC to <100 clients before it was caught. The amount at risk is a fraction of the BTC we own with equity capital and a fraction of loss reserves we carry for this exact purpose

— Zac Prince (@BlockFiZac) May 19, 2021