BlueBenx, a Brazilian crypto lending platform, reportedly blocked all of its 22,000 users from withdrawing their funds following an alleged hack that drained $32 million (or 160 million Brazilian real). While no details about the hack were made available, the company allegedly laid off most of its employees.
BlueBenx joins the growing list of crypto companies that failed to deliver on their promise of exorbitant yield returns this crypto winter. The Brazilian crypto lender promised up to 66% returns for users investing in cryptocurrencies via various in-house earning avenues.
A report from the local news board Portal do Bitcoin highlighted that BlueBenx halted all forms of withdrawals after falling victim to an “extremely aggressive” hack. According to BlueBenx’s lawyer, Assuramaya Kuthumi, the attack resulted in the loss of $32 million, which investors found hard to believe — given the lack of clarity about the alleged hack.
In the (roughly translated) words of an unnamed investor told Portal do Bitcoin:
“I think there’s a high probability of it being a scam because this whole hacker attack story seems like a lot of bullshit, something they invented.”
The lack of trust among investors stems from the fact that numerous crypto platforms — that offer high yields — have alleged similar scenarios in the past, wherein they end up halting funds withdrawal while hiding their incompetency in fulfilling the previously promised returns to the users.
Considering the growing risks involved in high-yield services, as stated above, crypto investors are now on the move to trying out lower-risk crypto yields as safer strategies.
Block Earner, an Australian fintech company, witnessed a surge of investors looking out for the “less risky version” of those returns. Speaking to Cointelegraph, the company’s general manager Apurva Chiranewala stated:
“Given that the risks have gone up significantly for those returns, those guys have actually started coming in engaging with us because we look like the less riskier version of those double-digit return products.”
As a result of this change in inverter sentiment, crypto companies like Block Earner are required to simultaneously build institutional products owing to the growing interest in that space.