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BlockFi, a crypto-lending startup based in New York, erroneously sent millions of dollars in Bitcoin (BTC) to some of the platform’s users. The company is now working on how to retrieve the funds after some of the recipients made withdrawals before the firm could reverse the transaction.
The company made incorrect promo payouts in Bitcoin (BTC) instead of U.S. dollars to some customers, Aljazeera reported. While BlockFi reversed the erroneous payout after discovery, some clients have reportedly made withdrawals from their accounts.
“On May 17, 2021, fewer than 100 clients were incorrectly credited with cryptocurrency associated with a promotional payout that did not belong to them,” the company said in a Reddit post. “BlockFi has contacted these clients and is working with them to rectify the issue.”
One user received 700 BTCs rather than $700, according to the Independent. At the time of writing, Bitcoin traded at $36,380.37, which meant that the user received around $25.4 million worth of the crypto.
The company’s exposure due to the incident is around $10 million, according to BlocFi co-founder and CEO Zac Prince. The amount is also decreasing as more users have returned the mistakenly sent coins back to the firm.
The CEO also assured that the level of exposure did not threaten the viability of the business. “BlockFi carries loss reserves as part of its accounting policies and this is a fraction of existing loss reserves — so no negative impact to equity or ongoing platform operations,” Prince explained.
BlockFi has also made enhancements to its system to prevent such incidents from recurring in the future. “The issue that caused the withdrawals was fixed and incremental safeguards have been developed to prevent any similar issue in the future,” Prince added.
Meanwhile, TrueMark Investments CEO Mike Loukas described the incident as a mere glitch. “As a stand-alone, it was just a glitch,” he said. “We see it with banks all the time in dollars. But because it’s such a volatile asset, the mistake gets magnified.”
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