What are the Crypto Lending Platforms hiding? ✋ [Major RED Flags] - YouTube

Welcome to another video. Today we  will be talking about the problems with  

crypto lending sites. So if you are thinking  to earn interest on your bitcoin or simply  

lend money and deposit crypto as  collateral this video is for you.

My name is Jakub from P2P Empire and here on this  channel we review individual P2P lending sites  

and educate you about all of the aspects of P2P  lending. If your goal is to become a more educated  

investor consider subscribing and hit the like  button to see more videos like this in the future.

Due to the current crypto hype there are many new  

emerging platforms that try  to profit from the industry.

Before we dive deeper into this topic, I want you  to first understand the process of crypto lending.

There are different investment products  within the crypto lending industry,  

however, to keep it simple we can define crypto  lending as an alternative investment from, where  

investors lend fiat money or cryptocurrencies  to other borrowers in exchange for interest.

The crypto lending platform is  the facilitator of the transaction  

between the investor and the borrower. It's  basically a middle man that sets the rules.

The process for the investor  is quite straightforward.  

You deposit funds to the crypto lending  platform, choose one of the offered  

investment products and invest in loans  that are secured by crypto collateral.

The borrowers repay the principal amount  with the interest back to your account.

The collateral offered by the borrower is always  at least twice as high as the loan amount.

We call this metric loan to value or  the better acronym for this is LTV.

As you know, the value of digital assets  like cryptocurrencies is very volatile,  

which is why the P2P crypto platform  sells the collateral as soon as  

it reaches a certain threshold  (typically the LTV of 90%).

That way your investment is always protected.

Not bad uh? It almost feels like  you as an investor can’t lose money.

Well, wait for it, the best is yet to come.

The crypto lending platforms often  offer interest between 5% and 10%. It  

obviously depends on the cryptocurrency you are  depositing as well as on the desired liquidity.

If you want to be able to withdraw your money  anytime, you will get a lower interest rate.

But still, earning 5% to 10% interest while  

being able to withdraw your money  anytime sounds like a dream right?

Well, we have reviewed some of the  crypto lending platforms in more detail  

so let’s have a look at what  this fuzz is really about.

The first crypto lending platform we're  gonna be talking about is Coinloan.

So, the first thing you might  notice on the website is the  

“limited offer” - get 2% interest for 6 months.

Scarcity and free money -  that’s a great way to lure  

investors into investing more money.  It’s also a great sales technique.

Overall, the site looks  quite legit. As you can see,  

Coinloan promises safe investments as they  collaborate with an insured custodian.

Let’s first check who is behind the platform. So  let’s navigate to the about us page to find out.

So here it says, we are Coinloan.  Upon scrolling down the page,  

the only info you get is that  the platform is from Estonia.

There is no information about the  founders or the team behind the platform.

So we dug deeper just to find out that the CEO  is Alex Faliushin and the CTO is Max Sapelov.  

Why is this not represented on  the platform, we don’t know.

As there’s no presentation of the team on Coinloan  

you should pay good attention  to the terms and conditions.

So first of all Coinloan doesn’t publicly  describe how your funds are stored.

Only when transferring your funds you will notice  that they are stored at Bilderings bank account.  

Bilderings is not a bank but an institution  with an electronic money license.

In the terms and conditions under section  5.19 you can read that CoinLoan shall not  

be liable for the inability to transfer  funds due to force majeure circumstances,  

including unforeseeable and uncontrollable  changes in the field of electronic payments  

or Cryptoassets turnover, or relevant  changes in the applicable legislation.

You can guess what this means.  As the description is very broad,  

they could in theory deny your  withdrawal with any reason.

Coinloan is also promoting an “interest  account” which might create the impression  

that your money is protected by some  kind of deposit protection scheme.

Don’t kid yourself. In the terms and conditions  

you can read that you are not covered  by any insurance against losses.

Last but not least Coinloan can also  amend the terms and conditions at its  

own discretion at any time prior  to sending you a notice about it.

That’s quite a red flag as this can really  affect your investments on this platform.  

We have not seen any platform that isn’t regulated  

where the change in terms and conditions  had a positive effect on the investors.

In fact, last year, we even  deposited some money on Coinloan  

to just see how it works and it didn’t.

Coinloan offers you two products, the interest  account and the option to create a loan offer.  

We created a loan offer even after  two weeks our money was not invested.  

So we decided to cash out from the platform.

While the platform interface is quite developed  and modern-looking, the transparency of the  

platform raises significant concerns  which you should keep in mind.

Another “amazing” crypto lending platform is Nexo.  

Nexo is funded through Credissimo,  a Bulgarian payday loan company.  

The CEO and Co-founder of Nexo is Antoni Trenchev  who often shares his bitcoin predictions on  

Bloomberg. The second co-founder of Nexo is Kosta  Kantchev who is also the co-founder of Credissimo.

Having the face of the CEO on the  platform is certainly a positive factor.  

If you want to look up statistical data, you  will be disappointed as there’s none available.

Last year we sent an extensive questionnaire  to Nexo with questions relevant to their  

business operations. Unfortunately they  never got back to us with the answers.

If you scroll down to the footer of the page, you  can read that Nexo is licensed and regulated. If  

you wonder by who, you have to do your independent  research as this is not presented on the platform.

We found out that Nexo has a financial  institution license in Estonia,  

which is however not a lending license.

If you want to find out Nexo’s corporate  address, you won’t find it on Nexo's website.

https://support.nexo.io/hc/en-us/articles/360008237013-What-is-Nexo-s-business-corporate-mailing-address-

Don’t you think it's odd that a company which  apparently has more than 1M users and manages  

4B USD doesn’t even disclose the  corporate address on their website?

Just comment your opinion in the comments below.

According to some external sources we  found branches in Switzerland, Estonia  

and in the UK. There are multiple companies  connected to Nexo, including Nexo Capital Inc.  

which is a company registered in the Cayman  Islands from which the token sale was conducted.

If you read the terms and conditions  you won’t find much info about  

how your funds are stored. When  depositing money, you are transferring  

your funds to the InCore Bank in Switzerland  which is the custodian of your cryptocurrency.

As you could expect, Nexo makes it also clear  that they are not liable for anything arising  

from using Nexo which basically means  that they aren’t liable for your losses.

If you ever think of borrowing money on Nexo,  

you should certainly rethink the security of  your collateral. It has happened in the past,  

that when a cryptocurrency plummeted the  collateral was liquidated in a matter of minutes.

This makes borrowing money with  crypto as collateral quite useless.

Let’s move on to the third and last crypto lending  platform which we will have a brief look at.

MyConstant is similar to the  earlier mentioned platforms.  

You can either invest in crypto-backed loans  or deposit crypto in order to borrow money.

When browsing through the homepage, you  will see an excellent TrustPilot rating,  

which as you know, is not really  something you should primarily rely on.

When you browse some of the  product pages on myconstant  

you will likely see many  comparisons to savings accounts.

For the average investor it may seem like  Constant is providing a type of savings account.

You should, however, read the  footer where it clearly says that  

Constant isn’t a bank nor a  regulated financial institution.

The comparison to savings accounts  is therefore misleading at best.

A positive comment goes certainly  towards their statistics page,  

which looks much better than many statistics  pages of traditional p2p lending sites.

Constant must have released the statistics  page sometime within the past few months,  

as the platform did not have any publicly  available data back in early 2020.

If you want to find out who’s behind  the platform, you will be disappointed  

as Constant does not share any  information about the founder or the CEO.

Some external sources mention  the name Zon Chu. Unfortunately,  

we haven’t been able to found his LinkedIn  profile or even a picture on Google.

We reached out to Constant and brought up the  lack of transparency. Their answer was that  

they used to have a BIO page but apparently  it sended the wrong message to the team that  

some people deserve more recognition than  others, which is why they took it down.

I don’t know about you, but having at least a  portrait picture of the person who runs a P2P  

platform that claims to manage  investments worth more than 67 M USD  

is the least you can do to  build trust with your audience.

But let me know in the comments below what  you think. Do you believe that a crypto  

lending platform should at least introduce  the founder or the CEO of the company?

When it comes to the terms and conditions  of Constant, they can amend them  

at any time without prior notice. And of  course, by using the platform, you agree  

that you might lose all of your money. So. What’s the takeaway from this video?

Crypto-lending is due to the lack of transparency  

quite a risky segment within  the P2P lending space.

Those three mentioned platforms  are just the tip of the iceberg.  

There are new crypto lending sites  popping up on a weekly basis.

Crypto lending platforms typically  lack proper support or at least we  

haven’t gotten proper answers to our questions.

Don’t get me wrong. The idea of investing  into crypto-backed loans is brilliant,  

but due to the lack of transparency it’s quite a  risky investment for most of the retail investors.

At the end of the day, you decide for  yourself what’s the best investment for you.  

The goal of this video is to raise some concerns  when it comes to crypto-lending platforms which  

of course are not being mentioned by  all of the crypto lending promoters.

If you want to make money with crypto.  Trading it on a legitimate crypto exchange  

is much safer than sending it to some  recently launched crypto lending platform  

in order to earn a bit of interest.

There are many scams in the crypto  industry and the risk of not being  

able to withdraw your money is  often higher than you might think.

But let me know your experiences with  crypto-lending platforms in the comments below.  

I am curious to hear your thoughts on this one.

So that's it from me today, thanks for  watching and see you in the next video.