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In hindsight, 2021 feels like a fever dream. It was the year of meme stocks, NFTs, and a seemingly unstoppable bull market in cryptocurrencies. Everyone — from your barber to your dentist — was talking about Bitcoin, Ethereum, and a dozen other tokens you’d never heard of before. Money was pouring into the digital economy, and it felt like the rules of traditional finance no longer applied.
Caught up in that whirlwind, I almost lost a huge chunk of my savings to what I can now clearly see was a financial trap. A trap disguised as legitimate platforms offering eye-popping interest rates. It wasn’t until the house of cards started falling that I realized just how close I came to being another crypto cautionary tale.
Let me tell you how I nearly got scammed — and how I got out most of my money back.
The Allure of “Safe” Crypto Interest Accounts
Back in early 2021, cryptocurrencies were booming. Bitcoin was on its way to a new all-time high, and Ethereum wasn’t far behind. But I wasn’t interested in day trading or YOLO-ing into altcoins. I was looking for a way to earn passive income from my crypto holdings — something a little more “secure.”
That’s when I discovered platforms like BlockFi, Celsius, and Gemini Earn.
These companies were offering something that seemed almost too good to be true: up to 8.5% APY on your crypto or stablecoin deposits. In a world where traditional banks were offering 1-2% on savings accounts (if that), this was a game-changer. The interest was paid out monthly or even weekly, compounding fast, and the interfaces were slick and easy to use.
I did my research — or so I thought. These platforms had shiny websites, big-name backers, and endorsements from major investors. BlockFi, for example, was valued at billions and had partnerships with institutions. Celsius claimed to be transparent, with weekly AMAs from the CEO, touting their mission to “unbank the banked.” Gemini, the exchange founded by the Winklevoss twins, was regulated in New York and known for being conservative compared to other platforms.
It all felt legit.
So I made a decision: I would spread my money to three crypto platforms and let the interest compound.
Over the next few months, I deposited close to $75,000 across them. Most of it was in stablecoins — digital dollars like USDC and GUSD — which were supposed to maintain their value and minimize the volatility. I was treating this like a high-yield savings account.
It felt like I had hacked the system.
Cracks Begin to Show
For a while, everything went smoothly. I was earning hundreds in interest every month, watching my balances grow. The crypto market was booming, so even my non-stablecoin holdings appreciated. I felt smart. I felt ahead of the curve.
Then things started to change.
Around mid-2022, rumblings began. First, there were whispers about Celsius. People were reporting delays in withdrawals. The company put out vague statements about “network congestion” and “high demand,” but the crypto community was on edge.
Then came the bombshell: Celsius paused all withdrawals, citing “extreme market conditions.” Then BlockFi and Gemini followed suit months later.
Panic set in and by the time I tried to get my money out all exchanges had paused all withdrawals.
The truth was starting to emerge.
These platforms weren’t simply “holding” your crypto and paying you interest like a bank CD. They were lending it out, often to other high-risk crypto firms — some of which were themselves playing dangerous games of leverage. In fact, much of the lending activity resembled the behavior of traditional shadow banks — but without regulation, oversight, or safeguards.
It was a Ponzi-like structure in many ways. New deposits were being used to fulfill obligations to older customers. When the market turned and liquidity dried up, it all came crashing down.
Watching the Collapse
In the months that followed, the situation went from bad to worse.
- Celsius filed for bankruptcy in July 2022. It was revealed that the company had a massive hole in its balance sheet — billions of dollars owed to customers with little hope of full recovery.
- BlockFi followed soon after, also filing for bankruptcy. Despite earlier bailouts and partnerships with FTX (which would itself later collapse), the company could not stay solvent.
- Gemini Earn turned out to be more complicated. While Gemini the exchange remained operational, their Earn program was tied to Genesis, which had made some very risky bets — including exposure to the now infamous Three Arrows Capital. Withdrawals were frozen, and legal battles ensued.
I watched helplessly as Reddit forums and Twitter threads filled with stories of people who had lost everything. Some had their entire savings or retirement accounts in Celsius. Others had trusted these platforms with six or seven figures.
It was gut-wrenching. And I wasn’t immune.
Dodging the Worst
By some combination of luck and instinct, I managed to escape most of the carnage.
I was able to finally get my money back from Celsius, BlockFi and Gemini in early 2024 and recover about 95% of my funds.
I essentially broke even, factoring in interest earned and the time the funds were frozen. But the stress, the uncertainty, and the sheer emotional toll were not worth it.
At the time, I thought I was making a smart financial move. In reality, I was unknowingly participating in a system that was built on shaky foundations.
The Lessons I Learned
Looking back, this was a turning point in how I view risk, due diligence, and the concept of “if it sounds too good to be true…“
Here are some key lessons I took away from this experience:
1. Yield = Risk
There’s no such thing as “risk-free” high yield. If someone is offering 8.5% returns on a stable asset when banks are offering 0.5%, they are taking on huge risks to do so. And if they don’t tell you where that yield is coming from, that’s a red flag.
2. Transparency Matters
A flashy website and weekly AMA videos don’t equal transparency. In hindsight, these platforms were incredibly opaque. I didn’t know where my money was going, who was borrowing it, or how decisions were being made. That lack of visibility should have been a dealbreaker.
3. Not Your Keys, Not Your Coins
It’s an old saying in crypto for a reason. When you deposit funds into a platform like Celsius or BlockFi, you no longer control those assets. They can lend, lock, or lose them — and you’re just another unsecured creditor if things go south.
4. Regulation Isn’t a Dirty Word
In 2021, a lot of people in the crypto world scoffed at regulation. They saw it as a hurdle to innovation. But after watching so many people get burned, I’ve come to see that some regulation is necessary — especially when you’re dealing with people’s savings.
5. Greed Clouds Judgment
I wasn’t trying to get rich quick. I wasn’t gambling on Dogecoin or flipping NFTs. But I was still drawn to the idea of “easy” passive income. That mindset — seeking outsized returns without understanding the risk — is dangerous. Greed isn’t just about chasing moonshots; it’s also about thinking you’re smarter than the market.
Never Again
I consider myself lucky. I walked away from the 2021 crypto lending collapse with most of my funds intact — but it could have easily gone the other way.
Some weren’t so fortunate. People lost life savings, had their faith in crypto shattered, and are still tied up in bankruptcy proceedings that could take years to resolve.
As for me? I’ve completely changed my approach. I still believe in the potential of blockchain and digital assets, but I’m no longer entrusting my money to centralized platforms offering sky-high returns and will only be investing less than 1 percent of my total net worth.
The crypto world will continue to evolve, and with it, new opportunities (and risks) will emerge. But I’ve learned my lesson the hard way:
If it sounds too good to be true — it is.
Final Thoughts
What happened in 2021 and 2022 was a sobering reminder that financial innovation doesn’t eliminate risk — it just repackages it. As we head into a new era of digital finance, it’s more important than ever to stay informed, stay skeptical, and protect your own interests.
Because at the end of the day, no one will care about your money as much as you do.
