Crypto Based Loans

Anyone ever look into crypto based loans? I saw an advert on one of the most reputable Bitcoin websites today for Nexo dot io and, out of character, I clicked on an ad!

I looked over their webpage and it seems pretty cool.

Deposit crypto, earn interest on unused balance, have access to a "credit card" to spend with, maintain ownership of the crypto (so you still have the upside if prices increase) and supposedly taking a loan against the crypto does not trigger a sale for tax purposes and thus no capital gains are due.

Downside, obviously if you don't hold it in your hand (so to speak), you don't truly own it, i.e. the same problem with "owning" physical gold in a vault somewhere halfway across the world (where I hear you can also "loan out" your gold and earn a %).

Seems like something that might be useful in certain circumstances...?

Thoughts?

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Originally Posted by PROFRBcom

Anyone ever look into crypto based loans? I saw an advert on one of the most reputable Bitcoin websites today for Nexo dot io and, out of character, I clicked on an ad!

I looked over their webpage and it seems pretty cool.

Deposit crypto, earn interest on unused balance, have access to a "credit card" to spend with, maintain ownership of the crypto (so you still have the upside if prices increase) and supposedly taking a loan against the crypto does not trigger a sale for tax purposes and thus no capital gains are due.

Downside, obviously if you don't hold it in your hand (so to speak), you don't truly own it, i.e. the same problem with "owning" physical gold in a vault somewhere halfway across the world (where I hear you can also "loan out" your gold and earn a %).

Seems like something that might be useful in certain circumstances...?

Thoughts?

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not your keys, not your bitcoin is the first thing that comes to my mind :)

i would be very careful, can just as well be a pyramid (or any other kind of) scheme

There is a lot that rings alarms.

1/ As said above - you don't hold the BTC anymore. When the company goes bust how do you think you're getting your BTC back?
2/ On their site they say - "Earn 8% on USD, EUR, GBP - 100% Asset Backed Guarantee." That's very high. SO will the risk be?
3/ Their Institutional License page says pretty things - but doesn't say where they are licensed. They appear to have an Estonian license.
4/ Their parent company appears to be Credissimo - running out of Bulgaria. It's a short term "pay-day" lender.

Looking at it - you only earn interest on EUR or StableCoins - they are "working" on making this available for ETH and BTC too.
They make 24%-120% per annum on short term loans and pay you 8% for fronting the cash.

Sources :
https://nexo.io/earn-interest/eur
https://nexo.io/institution-license
https://credissimo.com/

Overall - I don't think it's a scam - but it is high-risk as shown by the fact that they're prepared to pay out 8% to retail depositors.

If it was "a lock investment" then they'd be able to source funds from institutional sources as loans / bonds at 3-5%. The fact that they don't and instead are chasing retail depositors speaks volumes as to the risk.

When they do allow interest and card access on a BTC deposit I'll probably test it with 0.1 BTC - to see where this ends up.

You can lend crypto in some exchanges. But even there, you have a risk. Poloniex recently deducted 16% of all loans due to a huge loss they incurred.

Crytpo lending at exchanges is different than this kind of lending. Both have certainly risks. I made nice money at Poloniex before, but now interest rates are not worth of the risk. If they deducted 16% now it just shows the problem.

Anyways this new lending (the decentralised way and that is what we are apeaking about here I hope, not things like coinjar) is somehow bound to smartcontract. I also did not look at it profoundly but the good thing is there should be no or limited counterparty risk. But there must be a systemic risk: either if all people decide to withdraw or if there is some slippage of prices of crypto. Either way what I read about it seems to me (do not take it as granted), the risk is usually on the side of borrower. At least many people complain about rising prices of loans they already took and they can not avoid. I think it has something to do with falling ETH price (which is the platform on which the lending tokens are made). So the research must be made if and into which extent the risk is symmetric between borrower and lender, which would be unfortunate.

If you gain some experience Gooner, post it here. Any links are also welcomed I think. Just remember that past gains like with lending at crypto exchange do not guarantee future gains. This is a territory where everything is good until the disaster. The only people who are borrowing the money are cryptotraders aka gamblers 2.0.

Yeah, I mean, I don't think that anyone paying an 8% coupon is risk free, or even low risk in today's environment of interest rates.
I do think that having a profitable business back them, assuming there is liability by Credissimo, is a big plus (I haven't researched it and in fact it would probably take a solid lawyer to figure it out, even then, foreign courts lol) for longevity/credibility.

The idea of loaning crypto (I know it isn't yet implemented) and getting a FIAT loan that does not trigger a tax sale, at a reasonable interest rate, is a potentially grandly useful tool. It could provide someone who wants to go all in on crypto with working capital, at a CHEAP price, compared to crypto appreciation.

I really just wanted to discuss the pros/cons for use cases, rather than endorse such an obviously fringe product :)

I don't profess to be a crypto expert but shouldn't a company like this, be using an EV SSL?
Instead, they have a cheap ass Comodo SSL, which anyone with a domain, and email connected to that domain can obtain.

credissimo.com have an EV SSL, you think if they back nexo.io, then an EV SSL would be mandatory.

EG- If an organization here in AU takes a Government Grant, then by proxy, that organization also adheres to the TOS, AUP, PP, and whatever other framework policies the Gov., have in place. OK this isn't the same, but credissimo seems to be backing Nexo...

Reiterating: Licensed and Regulated... Sure BUT by whom, and where?
nexo.io/institution-license (no mention of those details)...

I'm not saying this is the case here, but CloudFlare (aka CrimeFlare) is known to allow crooks to hide behind their CDN. With plenty of other CND networks available these days, who, don't allow crooks, you have to wonder why company such as this would choose CF...

Whois info (nexo.io):
Updated Date: 2018-07-28
Creation Date: 2018-01-11
Registry Expiry Date: 2020-01-11
Registrant Organization: Nexo Capital Inc.
Registrant State/Province: George Town
Registrant Country: KY Name Server: JESSICA.NS.CLOUDFLARE.COM
Name Server: GRAHAM.NS.CLOUDFLARE.COM

https://www.reddit.com/r/Nexo/commen...any_structure/

Other domains:
nexobank.com
Registrar WHOIS Server: whois.godaddy.com
Updated Date: 2017-10-30
Creation Date: 2017-01-02
Registry Expiry Date: 2022-01-02
(privacy proxy same cloudflare servers as nexo.io, redirects to nexo.io)

nexohelper.com
Registrar WHOIS Server: whois.namecheap.com
Updated Date: 2018-04-28
Creation Date: 2018-04-28
Registrar Registration Expiration Date: 2020-04-28
(privacy proxy - point to same cloudflare servers as nexo.io but no site active)

nexoloan.com
Registrar WHOIS Server: whois.godaddy.com
Updated Date: 2018-10-21
Creation Date: 2017-10-20
Registry Expiry Date: 2019-10-20
(privacy proxy - point to same cloudflare servers as nexo.io but no site active

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Originally Posted by yeahfree

not your keys, not your bitcoin is the first thing that comes to my mind :smile:

i would be very careful, can just as well be a pyramid (or any other kind of) scheme

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Smells like a pyramid. Just avoid nexo.io

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Originally Posted by drifter8

Smells like a pyramid. Just avoid nexo.io

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Phantom licensing, possible fake/bogus testimonies, and nexo holds your crypto keys... What could possibly go wrong here :evillaug:

The only worth looking into crypto based loans are those decentralized and based on ethereum smart contracts. I'm talking about Maker Dao, Compound or dXdY where you are able to generate DAI stable coins by posting your ETH as collateral.

Bitbond seems pretty good, read some good things about them but have no experience with it. Might be worth for you checking it out.

I integrated crypto loans on one of my projects and it's a very bad idea. In case of crypto loans everything works only in favor of loan providers :(

Yeah, I’ve looked into crypto-based loans before. Platforms like Nexo and BlockFi make it easy to borrow against your crypto without selling, which is great if you believe in long-term price growth. The main benefits are liquidity and avoiding capital gains tax, but the risks are real — if the market dips and your collateral drops in value, you could face a margin call or liquidation. It can be useful, but I’d only recommend it for short-term needs and if you’re comfortable with the volatility risk.

Crypto-backed loans are definitely interesting if you’re a long-term holder and want access to cash without selling your BTC or ETH, especially since loans usually don’t count as taxable sales in many places, but the biggest risk is still trusting a centralized company with your coins - a lot of people got burned during the Celsius/BlockFi collapse thinking their crypto was “safe” while earning yield. I think they can be useful if used conservatively with low leverage and realistic expectations, but I’d personally never park my entire stack on one platform no matter how reputable it looks.