Crypto lender BlockFi mistakenly sent some users promotional rewards payments in Bitcoin this month instead of U.S. dollars

By Selena On May 20, 2021

Cryptocurrency lender BlockFi accidentally overpaid promotional rewards in bitcoin and is threatening legal action to recover the funds.

Last week, BlockFi tweeted that some promotion participants “may see an inaccurate bonus payment displayed in their transaction history.”

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

BlockFi mistakenly sent some users promotional rewards payments in Bitcoin this month instead of U.S. dollars

As part of a promotional giveaway in March, BlockFi offered users bitcoin rewards as a percentage of the trading volume. The promotion ran from March 18 to March 31. After starting to pay the rewards, BlockFi reported an issue on May 14, saying that the participants could see the bonus amount. incorrect.

It turns out that BlockFi accidentally paid an excessive amount of bitcoin for these promotional rewards. With some rewards amounting to hundreds of bitcoins, BlockFi has threatened legal action to recover the funds. However, this has also affected users who claim they have not been affiliated with the promotion.

A BlockFi spokesman on Reddit clarified the situation in a statement. The representative detailed that fewer than 100 clients were given cryptocurrency payouts that did not belong to them. The spokesman said that BlockFi contacted the clients to correct the mistake. He assured users that the situation did not affect any of BlockFi’s ongoing operations, adding that client funds are not impacted and are safeguarded.

While some returned BTC, others withdrew their rewards before they realized BlockFi’s mistake. For example, a Reddit user posted an image of a deposit of over 700 BTC, which was reversed. Though another claimed that a friend received five BTC and was able to transfer it off the platform.

Meanwhile, the company’s emailed affected users asking for the money to be returned:

Engineering for one-way blockchains is so phenomenally intense. I have huge admiration for all of the folks who do it.

I do keep wondering: could a chargeback protocol ever emerge in the future?

Will we be able to mediate transactions through a set of incentives and humans?

— Ric Burton ?? ‣ ?? ?? (@ricburton) May 19, 2021

BlockFi is said to have contacted several users with emails threatening to charge fees if they didn’t return the money. However, other users who did not participate in the promotion said they have also seen their withdrawals suspended. For example, one user received both BTC and GUSD, where BTC was reversed. However, when the user withdrew from GUSD the amount he had previously deposited, BlockFi accused him of fraud.

A similar incident took place last year involving Citigroup accidentally wiring $900 million to a group of lenders. However, in that instance, a federal judge ruled that the recipients didn’t have to have to return the funds. Citi intended to make a small interest payment on behalf of Revlon, but actually repaid the loan in full. Usually recipients of cash wired in error are obligated to return it. In this case, the creditors had reasonable grounds to believe the payment was intentional and refused to return roughly $500 million.

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