Crypto lending platform BlockFi will implement a new withdrawal fee scheme starting from Dec 1. The high costs and short notice has sparked anger from users.
Crypto lending platform BlockFi has introduced a new withdrawal fees scheme for its platform, much to the ire of its users. BlockFi will charge withdrawal fees for all assets starting from Dec 1, 2021. Users will only receive one free withdrawal per month, and the actual withdrawal fee will vary from asset to asset.
The fees will apply to Ethereum, Chainlink, PAXG, Uniswap, and Basic Attention Token. Stablecoin withdrawals done through Automatic Clearing House (ACH) bank transfers, will always remain free, otherwise being charged $50 per transaction after the first free transaction. Bitcoin and Litecoin transactions will be charged 0.00075 BTC and 0.001 LTC per transaction after the initial free withdrawal.
The company stated that the withdrawal fees were to account for “the persistent increasing transaction fees on the Ethereum network.” It also said that it does not intend to profit off of any withdrawal fees.
Still, the crypto community is angered by the move, which it does not believe is fair for the end-user. Other platforms, like Nexo, offer a more general withdrawal fee scheme, like three free withdrawals per month on any asset.
Users complained further that it takes a seven-day whitelisting period of withdrawal addressed before they can be enabled. That means that users who have not done this will not be able to make free transfers before the Dec 1 deadline kicks in.
But the problem goes further — the withdrawal fees are being charged in ETH, which is even more expensive as ETH is rising. Many users are now contemplating moving to a decentralized platform and showing further resentment for centralized ones.
Regulators also bearing down on BlockFi
The crypto community’s response has been justifiably and predictably one of outrage. Users on Reddit spoke of how they were unable to pay the withdrawal fee, even with what they had earned up until that point. BlockFi apologized for the short notice of the announcement, but that has done little to appease the community.
The United States Securities and Exchange Commission (SEC) is now turning its attention to the lending platform, as the SEC is reviewing whether its lending products accounts serve as securities. The agency has not alleged any wrongdoing, but it is keenly investigating the matter.
The New Jersey Attorney General has also sent BlockFi a cease and desist order to stop offering interest-bearing accounts, alleging that it has been funding operating through the sale of unregistered securities. Just a few days later, the state of Vermont also sent a similar order to BlockFi.