On February 14, 2022, BlockFi Lending agreed to pay US$100 million to settle charges over its crypto interest accounts: US$50 million to the US Securities and Exchange Commission and US$50 million in fines to 32 states. Customers had lent their crypto to BlockFi in exchange for a variable monthly payout, and the company had been selling the accounts since 2019. Gary Gensler, then the SEC’s chair, called it the first case of its kind against a crypto lending platform.
The rate on BlockFi’s website told customers the least. What mattered was who funded the payout and with what money, what had to happen before a customer could take the reward away, and what the reward was worth once it arrived as a token rather than as cash. An exchange’s sign-up credit, a staking yield and an airdrop can all be read the same way.
The cases below are dated so each point can be traced to the terms behind it. None of them is a forecast for any token. They show where the fine print sat, and what it cost the people who read the banner first.
Who Pays the Yield, and From Which Pocket
The SEC’s order spelled out where BlockFi’s interest came from, on accounts that held about US$10.4 billion for roughly 572,000 investors by late 2021. The company lent crypto to institutional and corporate borrowers, lent dollars to retail customers and invested in equities and futures, and it set its rates partly on what that lending could earn.
BlockFi’s terms let it pledge, rehypothecate or lend out the deposits. A customer’s reward was a slice of what BlockFi made by putting that customer’s coins at risk.
BlockFi told investors its institutional loans were “typically” over-collateralized. The SEC found otherwise: about 24% of those loans were over-collateralized in 2019, about 16% in 2020 and about 17% in the first half of 2021. Nothing in the advertised rate showed that ratio, which is why the size of a yield says little on its own. The useful question is what the platform does with the deposit to pay for it.
Other rewards draw on other sources. A sign-up credit or a referral payment comes out of the platform’s marketing budget, so the platform caps it and can end it. A staking reward comes from the network, through newly issued tokens and fees, and a custodial provider usually keeps a commission before passing the rest along. A lending yield depends on borrowers paying back. Each source breaks in its own way, and the terms should say which one sits behind the number.
Celsius Network shows the cost of describing that source wrongly. The Federal Trade Commission alleged in a July 2023 complaint that Celsius had told customers it earned its profits at “no risk” to them by making secured loans, and that it billed itself as safer than a bank. On July 20, 2026, the agency announced settlement orders under which three of the company’s co-founders would pay a combined US$16.5 million to resolve those charges.
Lockups, Claim Windows and Other Gates
Next comes what has to happen before a reward belongs to the person who earned it. At Celsius the answer changed in a day. On June 12, 2022, the company paused all withdrawals, swaps and transfers between accounts, and on July 13, 2022, it filed for Chapter 11 protection in New York. Accrued rewards, and the deposits that had earned them, were stuck behind the freeze.
The FTC’s complaint also listed conditions that the headline rate left out. In early 2022, the Celsius homepage told visitors they could “Earn up to 17% APY on your crypto”, yet the complaint said the top rates applied only to a handful of lesser-known coins, not to Bitcoin or Ether, and only to members of a loyalty program that required buying a set amount of the company’s own CEL token. By the complaint’s count, more than 99% of customers never earned 17%, and the median rate was about 4.9%.
Protocols set gates of their own, though at least those are written into code. Ethereum’s staking deposit contract opened in late 2020, but withdrawals arrived only with the Shanghai/Capella upgrade on April 12, 2023. Until then, as ethereum.org puts it, stakers “couldn’t use or access” their staked ETH. Anyone tallying staking rewards in 2021 was counting money with no confirmed withdrawal date.
Airdrops run on a clock. When Arbitrum distributed its ARB token in 2023, eligible wallets got about six months to claim, until Ethereum block 18,208,000 on September 24. About 69 million ARB was still unclaimed at the deadline, and the Arbitrum Foundation swept it into the DAO treasury, The Block reported. Exchange referral and sign-up rewards often add an identity check and a minimum holding period, and the reward can lapse if either one is missed.
Where a Casino Bonus Puts Its Gate
Casino sign-up offers yield to the same reading, and the gate is usually where two of them part ways. The operator pays for an offer out of its own marketing budget, much as an exchange funds a sign-up credit. What changes from one offer to the next is the condition standing between a win and a withdrawal, and two offers with the same headline can put it in very different places.
On bonus.ca, the page covering best online casino bonuses in Canada shows that difference where it sorts offers by type. Free spins without wagering stand apart there as the type that lets players keep all of their winnings, with, in the page’s words, “pretty much no strings attached.” A tip in the same section adds that most bonuses do come with strings attached, which is why it tells readers to go through each offer’s terms before claiming it.
Put beside the crypto cases, the two types fall on opposite sides of the gate. Winnings from a no-wagering spin behave like a reward with no lockup at all. A wagered bonus is closer to staked ETH before April 2023: the balance shows on screen and stays there until the condition is met. Neither type changes the odds of the games underneath, and either can end with nothing won.
The page’s audience is in Canada, and the rules there change at provincial borders: Ontario licenses operators through iGaming Ontario under AGCO oversight and sets the minimum age at 19, a year above Alberta’s. Outside Ontario, the page says, the casinos it lists are typically licensed by international bodies such as the Kahnawake Gaming Commission or the Malta Gaming Authority. That licence line shows who stands behind an offer, and it deserves a look before any wagering term does.
The Unit a Reward Is Paid In, and How Its Rate Is Quoted
Last comes the unit: what a reward is worth when it lands. BlockFi paid interest monthly in cryptocurrency, so a customer who lent Bitcoin received more Bitcoin, at whatever price Bitcoin fetched that month. A reward paid in a falling token is worth less in dollars than its rate implies. A 5% reward on a token that drops 20% leaves the holder about 16% down, since 1.05 multiplied by 0.8 is 0.84.
The risk grows when the reward is tied to the platform’s own token, and the CEL requirement behind Celsius’s top rates carried a second cost. Finbold reported that CEL’s market value fell 85.84% in 2022, from US$1.06 billion on New Year’s Day to US$0.15 billion the day after the bankruptcy filing. Customers who had bought CEL to reach the top tier carried that loss on top of their frozen balances.
Rates also come quoted two ways. Annual percentage yield (APY) includes compounding, while annual percentage rate (APR) leaves it out. BlockFi launched its accounts promising 6.2% APY, compounded monthly, which works out to about 6.03% APR. The gap is small at that level and widens as rates climb, so two offers compare fairly only once both are stated the same way.
Tiers can shrink a rate further. By late 2021, BlockFi paid 4.5% on the first 0.1 BTC in an account, 1% on the portion between 0.1 and 0.35 BTC, and 0.1% above that. A customer holding one Bitcoin would have earned about 0.00765 BTC over a year at those rates, a blended return of roughly 0.77%, against a top Bitcoin rate of 4.5% on the same schedule.
What Canada’s Securities Regulators Asked Platforms to Promise
On February 22, 2023, the Canadian Securities Administrators published CSA Staff Notice 21-332 and named the insolvencies behind it: Voyager Digital, Celsius Network, the FTX group, BlockFi and Genesis Global.
Unregistered crypto trading platforms that wanted to keep serving Canadians while their registration was pending had 30 days to give an enhanced pre-registration undertaking. Those that couldn’t were expected to off-board their Canadian users and restrict access.
Several of the new commitments reach straight back to the BlockFi and Celsius cases. A platform signing the template agreed to hold client crypto in trust, separate from its own assets, and not to pledge, rehypothecate or otherwise use it, which was the very freedom BlockFi’s terms had reserved. It also needed the CSA’s written consent before clients could trade contracts based on its own proprietary tokens, the kind of house-token exposure that the CEL tier had built in.
The notice warned that registration “cannot eliminate all risks”, and it raised the concern that Canadians who believed they held Bitcoin on a platform might turn out to be unsecured creditors if it failed. Signed undertakings, it added, would be posted on the CSA website, where anyone in Canada could read what a given platform had promised to do with client coins.
Those filings speak to who holds the deposit and what may be done with it. No regulator can say what a token will be worth next month, and that part of any promotion still comes down to the unit it pays in and the way its rate is written.
Featured image by Mireille Okonjo
