By Nathan Ferguson
Following an alleged hack where about 160 million Brazilian Real (approx. $32 million) was carted away, the crypto lending platform based in Brazil, BlueBenx, has reportedly restricted the withdrawal of funds on its platform. So far, no official statement about the hack has been released, but beyond the withdrawal restriction, the company also allegedly fired a larger percentage of its workers.
This situation numbered BlueBenx among the increasing number of companies that utterly failed in delivering the promise of exorbitant yield made to users during this crypto winter. The crypto lending platform promised its users high returns up to 66% for every crypto asset invested through the in-house earning schemes.
Unclear Situation Causing Lack of Trust
According to a report from a local news outlet, Portal Do Bitcoin, it was mentioned that BlueBenx has stopped all forms of withdrawal on the platform claiming it fell victim to an aggressive hack. Based on the report from Assuramaya Kuthumi, the company’s lawyer, the hack resulted in about a $32 million loss in funds. However, investors on the platform are finding it difficult to believe especially given that there is no clarity to the situation.
In the words of an anonymous investor on the platform, as translated, there is a high chance that the whole setup is a fraud because nothing is aligning in the whole hack story which could have probably been invented.
The reason why investors and every other person couldn’t trust the situation is premised on the precedence of most other crypto platforms, especially those offering outrageous yields. Most of them follow the common pattern of halting funds after a while as a way of covering their inability to fulfill the promises made to their users.
Investors Jumping Ship to Less-Riskier Options
Given the ever-increasing risks involved with services promising high returns, most crypto investors are now forced to consider the other services offering lower yields as a way of ensuring safety in the space.
An Australian fintech company, Block Earner, is reportedly experiencing a surge in new investors joining the platform, which is considered a less risky option. The general manager of the company, Apurva Chiranewala, when speaking with Cointelegraph, said: that investors are looking to engage us because we are considered a less-riskier option given the increase in the risk level of crypto investment services.
Mainly because of the huge sentiment toward less-riskier investment options, companies like Block Earner now have to build more institutional products to cater to the increased interest in the space.