#2 seems most on point. He was saying he also earns yield on his bitcoin. I just shook my head honestly & told em’ to try to get a hardware wallet
The yield part fits #2, and a hardware wallet is a fair thing to suggest.
Bitcoin doesn't pay interest by itself. If someone pays him yield, they're almost always lending his coins out or trading with them, so his return depends on whoever borrowed them paying back. That's the risk he's carrying.
Two cases with official records:
- BlockFi: the SEC said customers lent their crypto to BlockFi for a monthly interest payment, and that BlockFi made false and misleading statements about how risky its lending was. $100M in penalties, Feb 2022. https://www.sec.gov/news/press-release/2022-26
- Celsius: advertised up to 18% APY and said withdrawals were always available. It froze withdrawals on June 12, 2022 and filed for bankruptcy a month later. https://www.ftc.gov/news-events/news/press-releases/2023/07/ftc-reaches-settlement-crypto-platform-celsius-network-charges-former-executives-duping-consumers
If he wants to keep it, three questions to ask the platform: who borrows the coins, what happens to his bitcoin if they go bankrupt, and can he withdraw today with no notice period. If there's no clear answer, that's the answer.
Bitcoin doesn't pay interest by itself. If someone pays him yield, they're almost always lending his coins out or trading with them, so his return depends on whoever borrowed them paying back. That's the risk he's carrying.
Two cases with official records:
- BlockFi: the SEC said customers lent their crypto to BlockFi for a monthly interest payment, and that BlockFi made false and misleading statements about how risky its lending was. $100M in penalties, Feb 2022. https://www.sec.gov/news/press-release/2022-26
- Celsius: advertised up to 18% APY and said withdrawals were always available. It froze withdrawals on June 12, 2022 and filed for bankruptcy a month later. https://www.ftc.gov/news-events/news/press-releases/2023/07/ftc-reaches-settlement-crypto-platform-celsius-network-charges-former-executives-duping-consumers
If he wants to keep it, three questions to ask the platform: who borrows the coins, what happens to his bitcoin if they go bankrupt, and can he withdraw today with no notice period. If there's no clear answer, that's the answer.