Bitcoin and crypto lender BlockFi has been incorrectly depositing and then trying to reverse excessive amounts of bitcoin to users’ accounts, according to users who spoke to CoinDesk and others who posted their experiences on Reddit.
The issue is apparently connected to a March promotional giveaway, specifically the March Trading promotion, in which qualifying clients were eligible for a bitcoin reward bonus if they traded a certain volume in USD during the promotional period that ran from March 18 to March 31. The bonuses were to be credited to people’s accounts by May 31.
On May 14, however, BlockFi tweeted that there was an issue and some participants might see an inaccurate bonus displayed on their transaction balance.
But not everyone seems to have gotten the message. The result is that emails threatening legal action have gone out to some users who say they withdrew their erroneous bitcoin rewards before they realized the situation. Other users who did not participate in the promotion say they have also seen their withdrawals suspended, though it is not clear if these issues are related.
In a statement sent to CoinDesk and also shared on Reddit, a BlockFi spokesperson said that on May 17, fewer than 100 clients were incorrectly credited with cryptocurrency associated with “a promotional payout that did not belong to them.”
“Certain withdrawals were delayed and trading paused while BlockFi contacted clients to rectify the issue,” said the spokesperson. “At this time, withdrawals and trading on the platform have resumed. The situation did 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. Client funds are not impacted and are safeguarded.”
Reversing the excess bitcoin rewards
One user who reached out to CoinDesk said they received a large sum of BTC in their account which they thought was a reward for referring their friends – so they sent it to their cold storage wallet.
BlockFi’s previous promotion was, indeed, a friend referral promotion which offered (albeit small) BTC rewards.
The user said after looking at the transaction in more detail, they realized it was an error, so they requested a cancellation of the withdrawal. The cancelation request was confirmed via email and their account shows the BTC transaction was reversed, with a note specifying they had reversed the bonus transaction. Nevertheless, the user said the bitcoin reward ended up in their cold storage wallet. They shared these documents with CoinDesk, and the blockchain shows that the funds were indeed transferred to their wallet address.
The next day, they received a phone call and an email (which CoinDesk has reviewed) from BlockFi threatening legal action if they didn’t return the funds, but also offering $1,000 worth of the stablecoin GUSD for any trouble this may have caused.
Other users on Reddit posted images of BlockFi’s “generous” giveaway, with one deposit amounting to over 700 BTC. That transaction, according to the user, was reversed. Another said their friend received 5 BTC and was, in fact, able to move it off the platform.
Yet another user said they received both BTC and GUSD, only to have the BTC reversed. The GUSD remained, but a couple of days later when they tried to withdraw some USDC, a different stablecoin they had deposited a month earlier, BlockFi sent an email accusing them of withdrawing funds that weren’t theirs.
