On: Blockfi agrees to pay $100M in penalties and pursue registration

[thebean11]

It's unlikely that every single borrower would default just like it's unlikely every stock in an index fund would go to zero. I wouldn't really compare it to options trading, junk bonds are a much better comparison. Lower potential return but also much less likely you would lose money than with options.

Obviously the devil is in the details, it's not clear if/how these loans are secured.

[CPLX → thebean11]

There’s no reason at all to think that a complete and total default is unlikely.

It’s far from certain but it’s certainly plausible that the value of nearly all cryptocurrency’s will collapse to nothing at all.

[Animats → CPLX]

The more likely failure mode is that you've lent to something that's leveraged. That can go to zero on a partial drop of the underlying asset. Which is what happened in 2008.