Finblox withdrawal restrictions trigger concerns from the community
Twitter user Gofortim2 called out to lending platforms to become more transparent and honest on where assets are deployed.
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Finblox, a crypto-staking platform backed by Three Arrows Capital (3AC) has paused reward distributions and tightened its withdrawal limits. Following this, community members expressed concerns over their assets, with some calling for transparency and bringing up decentralization.
In a tweet, Finblox announced that the firm is assessing the effects of 3AC’s situation on its liquidity. While the firm does this, it highlighted that it paused its reward distribution for all of its users and lowered its monthly withdrawal limit to 1,500 USD.
Many of the platform’s users were disappointed with the news, sharing their frustrations about not being able to withdraw their funds. On the other hand, community members started calling out Finblox’s 90% Annual Percentage Yield (APY) offer on staking Axie Infinity Shards (AXS) as unsustainable.
According to Finblox user Terence Lee, he has withdrawn his assets from Finblox during the Terra (LUNA) collapse. He noted that it’s becoming more clear that lenders who offer large returns were “taking too much risk.”
In response to the current situation, Twitter user Gofortim2 called out to lending platforms to be more transparent. They tweeted:
(2/6) Be 100% transparent.
Be brutally honest on what was lost and where assets are deployed currently. Vague statements make it impossible to know exactly how risky things are. Poor decisions would surface eventually so why bother even hiding things?https://t.co/STxjDFRVOu
— 0xTim.eth (@gofortim2) June 16, 2022
Additionally, the Twitter user noted that it may be time for firms to lower their APY rates as it has become an ineffective tool for attracting users, now that users are fearing for the safety of their assets.
On June 16, the CEO of 8 Blocks Capital, Danny Yuan publicly called out platforms that hold assets that are owned by 3AC, requesting them to freeze the company’s funds. Yuan claimed that they detected a sum of $1 million missing from their accounts with 3AC.
Meanwhile, a report noted that the firm borrowed Bitcoin (BTC) from lending platform BlockFi and was not able to meet a margin call, following the market’s downturn this week. Some even estimate that 3AC has gotten liquidated by $400 million in multiple positions.