Crypto startup is offering 8.6% interest on savings accounts

Discussion in 'Business, Investing & Finance' started by BMF, Jan 16, 2021.

  1. BMF

    BMF Bad Mother....
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    • Detroitgator

      Detroitgator Well-Known Member
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      I was fine with doing that when my demand note was with GMAC, then it became Ally Bank, but no, i wouldn't take that risk with this.
       
      • FireFoley

        FireFoley Senior Member
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        I agree. I can't find the story but a few months ago there was one of these fly by night high interest rate savings accounts. It advertised as FDIC insured, but the fine print said that they were not FDIC insured, but that the banks where the money was kept were FDIC insured. Long story short, depositors wanted their money and could not get it. Company said they made requests to the banks where the money was but that was baloney.

        This one clearly says "NOT FDIC". I get it. But to me it is buyer beware. Tread at your own risks, WinkleVY twins or not.
         
        • BMF

          BMF Bad Mother....
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          Thanks DG. I might put in $5k and see what happens. The investment I made w/ Streetshares was similar to this (but Streetshares was vetted with USAA, so I felt a lot more comfortable). Streetshares is in a deal with Ally Bank right now to sell to them, should happen in the next 6 months (I hope). I'll make a nice return on that one.
           
        • Detroitgator

          Detroitgator Well-Known Member
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          Note sure if you saw my other post about this, but Ally just announced to all us demand note holders that they are redeeming all accounts, so not sure how (if at all) that affects the Streetshares deal. Even for that Ally account, the interest rate is all the way down now to 0.5% with a balance of $90K+, lower than that for smaller balances. It was still at 1.5% less than a year ago.
           
        • BMF

          BMF Bad Mother....
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          Yeah, I'm not sure what Ally is doing (as far as their business model). Most of the "high interest" savings accounts have tanked - I've got money at PenFed and it was 2% just a year ago and it's .6% now.
           
          • UFHealthGator

            UFHealthGator Well-Known Member
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            This is a bit risky. Startup goes under, all your BTC goes poof. The beauty of BTC is you don't need any bank to store it safely. You can have your passkeys on a cold hardware wallet for peace of mind. Of course that also means if you lose your hardware wallet and your pass keys, or if somebody robs you at gun point and you cough up your pass keys, you lost it too. Now I don't know what their financials are, but you are trusting your BTC in an institution that is not FDIC insured (and likely never will be given that they hold and pay in BTC, not USD).
             
            • 78

              78 Dazed and Confused
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              This takes me back to the pedophiliac days of Lou Pearlman’s Ponzi scheming Transcontinental Airlines, a money market yielding 11%. I’d get these giddy retirees coming into my office bragging about the unheard rate on their liquid savings, and I’d say, “Oh really?” I’d point out what the rest of the world was paying by comparison. They weren’t interested in knowing why until their liquid savings went kaput and regulators swooped in to claim the wreckage.

              When you called the Orlando offices of Transcontinental Airlines, which actually had no airplanes, you inevitably waited 25 minutes while listening to Backstreet Boys hold music. That made the experience all the worse.

              Bitcoin is the same — it’s a Ponzi with zero intrinsic value. People have fooled themselves into thinking it does.
               
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              • NovaGator

                NovaGator Well-Known Member

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                Years ago a company named Keller Finance, an "innovated alternative automotive finance company"
                went viral by offering very attractive rates of return of between 14 to 18 percent. With your invested funds they would provide dead beat clientele with auto loans with an APR of up to 30%. These loans would be "fully collateralized" via liens against said motor vehicles. Thousands jumped in and millions were invested.
                The vehicles pawned off on these folks were worn out old heaps priced at 10 times their actual value that may last 6 months, but carried a 3 year payment agreement. Shortly the old junkers would bite the dust and, naturally, payments against these rust buckets would cease. Repo-ing the vehicle would was a waste due to the fact the the cost of the repo ($400) was more than the old tub was worth.
                The whole deal just turned out to be a scam with the company's top dogs raking off millions in salaries, bonuses, fees, expenses, etc. The ruse lasted a few years when the whole deal collapsed leaving investors holding the bag and many of the firm's upper rank in prison.
                Moral: Be careful where you put your money. Scams always come wrapped up in very attractive packages.
                 
              • The Lateral Move

                The Lateral Move Well-Known Member

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                I've been using crypto stablecoins on BlockFi as part of my savings since the Fed cut the rate. BlockFi has been around a good bit longer and offers 8.6%

                https://blockfi.com/

                There's a few other platforms that have done the same.
                 
              • LagoonGator68

                LagoonGator68 mostly peaceful protester
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                • BMF

                  BMF Bad Mother....
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                  I put $5k in this, I'll let you all know how it goes. I don't mind "alternative" investments and have done really well w/ realtymogul, streetshares, and fundrise.
                   
                  • no1g8r

                    no1g8r Bringing Reason to the Masses
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                    I knew people who did really well with Stockgeneration. They got in early, made big gains, and got out early enough to bank their profits. The key was getting out early enough. And being okay with knowing you were going to make some money off of others who were left holding the bag.

                    Wayback Machine - StockGeneration

                    Stock Generation - Wikipedia
                     
                    • EyeDocGator

                      EyeDocGator Politically Incorrect
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                      I suggest you all read the fine print. The crypto is loaned out to speculators. If the crypto increases in value the loans can be repaid with interest and everyone wins. If the crypto loses value, or we have a recession, or the entity that receives the loan absconds you can and probably will lose all. The loans are not secured and there is no guarantee the entities are even vetted for financial responsibility. You have no recourse if your investment is lost.
                       
                    • Detroitgator

                      Detroitgator Well-Known Member
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                      Yup, I've been saying the same about ANY of these high interest accounts, no matter what you are in. With big reward comes big risk. If something as big as Ally Bank (which took on GMAC, which was giant) is sh!tcanning their demand note accounts, the writing is on the wall.
                       
                    • Gatormac2112

                      Gatormac2112 The Voice of Reason
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                      Blockfi isn't a startup, it's pretty legit. They even work in tandem with Fidelity Digital Assets. If I understand it correctly the "loans" use the crypto value in the account of the person seeking the loan as collateral and no more than 50% of the portfolio value. If the price of the crypto drops to 70% of prior value they will liquidate the rest of the collateral to cover if the individual can't cover. It wouldn't affect someone elses account. I don't like the idea of using it for loans as the collateral is way too volatile, but I'm not too worried about using their interest accounts for holding my crypto as it was being held in an online wallet at Coinbase doing nothing and wasn't FDIC insured either.
                       
                      • alcoholica

                        alcoholica I'm what Willis was talking about
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                        On the flip side, if you have DG type money and it's too much to be insured by one institution, check out FICA's.
                         
                      • UFHealthGator

                        UFHealthGator Well-Known Member
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                        By the way are you guys familiar with staking? You can earn about 4-6% for example on Cardano ADA, and it is essentially a trustless savings account (it is a lot more complicated than that but I digress). Your crypto when staking on Cardano ADA remains at all times in your wallet and is only controlled by you.

                        No risk to your crypto itself. Worst that can happen is you don't get your staking reward during a certain period if your staking pool goes down or is offline. Your coins are not locked and you can spend them, send them and receive them as you like.

                        In my opinion it is much safer than Blockfi and other centralized options.
                         
                        • LagoonGator68

                          LagoonGator68 mostly peaceful protester
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                          Do you know a good site for crypto explanation that is reliable and not too complex?
                           
                        • UFHealthGator

                          UFHealthGator Well-Known Member
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                          This guy generally has quality content about Crypto. Not a kid on meth.

                          Also read about the way things get taxed before getting into this. The way it is taxed though is no different than earning crypto on Blockfi.
                           

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