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00:00:00.000 | Hey everyone, in this episode we discuss the crypto platform BlockFi,
00:00:04.320 | and since recording it, a lot has happened in the news. As of today, November 15th,
00:00:09.440 | 2022, BlockFi is no longer allowing customers to withdraw their own crypto,
00:00:14.320 | so all users, myself included, are stuck in a very frustrating situation.
00:00:19.360 | Needless to say, I'm not happy with the company and any recommendation you might hear for them
00:00:23.760 | in this episode should be ignored and considered outdated. Okay, on to the episode. A quick word
00:00:29.200 | from our sponsor today. I love helping you answer all the toughest questions about life, money,
00:00:35.920 | and so much more, but sometimes it's helpful to talk to other people in your situation,
00:00:41.200 | which actually gets harder as you build your wealth. So I want to introduce you to today's
00:00:45.440 | sponsor, Longangle. Longangle is a community of high net worth individuals with backgrounds in
00:00:50.880 | everything from technology, finance, medicine, to real estate, law, manufacturing, and more.
00:00:56.720 | I'm a member of Longangle, I've loved being a part of the community, and I've even had one
00:01:01.040 | of the founders, Tad Fallows, join me on All The Hacks in episode 87 to talk about alternative
00:01:05.840 | investments. Now, the majority of Longangle members are first generation wealth, young,
00:01:10.880 | highly successful individuals who join the community to share knowledge and learn from each
00:01:15.360 | other in a confidential, unbiased setting. On top of that, members also get access to some unique
00:01:21.760 | private market investment opportunities. Like I said, I'm a member and I've gotten so much value
00:01:26.960 | from the community because you're getting advice and feedback from people in a similar situation
00:01:31.440 | to you on everything from your investment portfolio, to your children's education,
00:01:35.920 | to finding a concierge doctor. So many of these conversations aren't happening anywhere else
00:01:41.200 | online. So if you have more than 2.2 million in investable assets, which is their minimum
00:01:46.400 | for membership, I encourage you to check out Longangle, and it's totally free to join. Just
00:01:51.920 | go to longangle.com to learn more, and if you choose to apply, be sure to let them know you
00:01:57.600 | heard about it here. Again, that's longangle, A-N-G-L-E dot com. Hello and welcome to a special
00:02:05.840 | episode of All The Hacks, a show about upgrading your life, money, and travel. So what's this
00:02:11.040 | special episode all about? Well, there was a lot in the news recently. A new quick and easy way
00:02:16.320 | to earn Southwest Companion Pass for a whole year, points devaluations from Hyatt and Marriott, and a
00:02:22.240 | big BlockFi settlement with the SEC. So with all that happening, I thought it'd be worth doing an
00:02:27.520 | episode today to talk through it all, and I also just wanted to share some recommendations from my
00:02:32.480 | recent weekend vacation. So let's do it. First, I want to talk about the amazing deal going on
00:02:39.120 | right now with Southwest Companion Pass. For those of you who don't know, Southwest Airlines' highest
00:02:44.960 | elite status is called Companion Pass, and it lets you name a person who can fly free any time you
00:02:51.040 | purchase a ticket, even if you pay with points. You just have to pay the taxes, and you can change
00:02:56.480 | your companion up to three times a year. I've had Companion Pass a few times over the years,
00:03:01.760 | and I've used it to fly with my wife all over the U.S. to Hawaii, Aruba, Cabo, and though I know
00:03:08.880 | Southwest flies to Turks and Caicos, I'm pretty disappointed we never got to use it there.
00:03:13.600 | Anyways, Companion Pass has to be one of the best travel hacks out there,
00:03:17.600 | and it's never been easier to get than it is right now. And that's because for all three
00:03:22.560 | Chase Consumer Southwest cards, that's their Plus, Premier, and Priority cards,
00:03:27.440 | if you spend $5,000 in the first three months, you get Companion Pass through February 28th, 2023.
00:03:35.120 | And if you're interested and you want to help me and the show out, you can sign up for any of those
00:03:39.280 | cards at allthehacks.com/southwest. Oh, and you get 30,000 Southwest points after spending $5,000,
00:03:47.920 | which means you'll end up with about $500 worth of points and Companion Pass. I don't know how
00:03:53.520 | long this offer will last, and honestly, if we weren't having a baby in June, I'd 100% be getting
00:03:58.400 | this card. Okay, moving on to some less exciting news in the points world, Hyatt is making some
00:04:05.600 | changes that on the whole aren't that great. Specifically, 70 of their hotels are moving to
00:04:11.600 | a higher award category, meaning you're going to need to use more points each night to book them.
00:04:16.480 | While this might seem like a pretty small number of properties, and it is, it just happens to be
00:04:23.200 | some of their best properties, places like the Ventana in Big Sur, the Andaz in Maui,
00:04:29.200 | and Park Hyatts in Kyoto, Paris, Sydney, and other cities around the world. So that sucks,
00:04:36.160 | but the silver lining is that even with these changes, compared to other hotel programs,
00:04:41.520 | Hyatt's award chart is still so generous, and the most you're going to have to pay for their
00:04:47.280 | highest tier of luxury hotels is only 35 to 45,000 points a night. Yes, that might be 30%
00:04:53.840 | more points than before, but it's still pretty good. And if you're looking at what that same
00:04:58.880 | number of chase points would get you booking in their portal, since Chase and Hyatt are transfer
00:05:02.960 | partners, it'd only be 500 to 675 bucks. Yes, that's expensive for a hotel night. In fact,
00:05:09.680 | I'm not even sure I've ever spent that much on a hotel night, but many of these properties
00:05:14.160 | regularly go for well over a thousand dollars a night, so it still can be a great deal.
00:05:19.760 | Okay, so it always sucks when your points are worth less, but I know I'll still be transferring
00:05:26.480 | chase points to Hyatt to book these amazing hotels around the world. And this change looks like
00:05:32.720 | nothing compared to what's coming for Marriott. For anyone who missed it, starting sometime in
00:05:37.760 | March, Marriott is moving to a dynamic pricing system where the points you need per night will
00:05:42.880 | fluctuate with the market rate for hotels. That effectively means that amazing deals in places
00:05:48.640 | like Bora Bora or the Maldives will probably be gone forever. Now, despite the change coming next
00:05:55.200 | month, Marriott did say that most of their hotels won't cost more than their peak pricing in 2022.
00:06:01.920 | But one, what does most mean? It seems pretty vague to me. And two, come 2023, it's game over.
00:06:09.280 | In next week's episode, I'm joined by Points and Miles expert Richard Kerr,
00:06:14.320 | and we're going to talk a bit about what's going on with Marriott, so definitely tune in for that.
00:06:19.360 | What's my takeaway? Well, I was a dedicated Starwood traveler and transitioned that loyalty
00:06:24.240 | to Marriott since they merged. But honestly, I think I might be going all in on a transition
00:06:29.360 | to Hyatt this year. To be fair, we're having a baby in June, so all in doesn't really mean that
00:06:34.480 | much. I might only have a dozen nights all year, but I probably want to start making that transition
00:06:39.200 | sometime, so I might as well start now. Next, I want to talk about BlockFi. I think you all know
00:06:46.800 | I'm a huge fan. I have a lot of money in my BlockFi account and they're a sponsor of the show,
00:06:51.680 | so I feel like I have to address their big news this week. But before I do, I want to clarify
00:06:56.720 | that everything I'm saying is my own opinion. I haven't consulted with BlockFi on it,
00:07:01.200 | and they certainly didn't ask me to talk about this. Okay, so the main headline is that BlockFi
00:07:06.880 | has agreed to pay $100 million in a settlement with the SEC and state regulators over their
00:07:13.120 | high-yield interest account. And they have finally been provided with some clarity on a path forward
00:07:18.400 | to offering their product in a compliant way. There's a lot more context to that, so I'll link
00:07:23.760 | to everything in the show notes. But in my opinion, this is pretty good news for the crypto industry
00:07:28.640 | and the future of these products. But what about in the short term? Well, in the interim, they're
00:07:33.680 | going to be halting all interest account opening for new customers and preventing all existing
00:07:38.880 | customers from making any additional deposits. However, any existing balances you have right now
00:07:44.800 | will continue to earn interest. As part of this process, they're going to be registering their
00:07:50.080 | new high-yield product, BlockFi Yield, with the SEC in line with this new guidance they've gotten,
00:07:56.240 | and they're going to plan to make it available soon, and all BlockFi interest accounts today
00:08:00.480 | will convert over to BlockFi Yield accounts. But they haven't provided much more clarity than that.
00:08:04.880 | If you're not in the U.S., good news. You can continue to sign up and make deposits as you
00:08:10.000 | want. This whole thing reminds me a lot of how Uber, Lyft, and Airbnb were operating in a gray
00:08:15.680 | area and chose to just keep going and launching their products, even though they weren't sure
00:08:20.800 | whether they were allowed, or in some cases, thought they weren't but thought they might get
00:08:25.120 | away with it. Except the difference here is that the SEC seems to take things a bit more seriously
00:08:30.160 | than local regulators. Well, in BlockFi's case, they weren't sure whether they needed to register
00:08:35.920 | their product as a security, and best I understood, they even sought guidance from regulators but
00:08:41.680 | never got a clear answer until they started getting some cease and desist. Fortunately for them,
00:08:47.280 | they tried their best to play by the rules, and regulators actually let them continue their
00:08:51.920 | operations until they could agree on a plan going forward, and this is that plan. I do want to
00:08:58.000 | clarify they did also make some misrepresentations about the degree to which their loans were over
00:09:03.200 | collateralized, meaning if someone was borrowing against their Bitcoin, how much more Bitcoin did
00:09:08.560 | they have than the amount they were borrowing, but given how often financial firms are fined
00:09:13.280 | for making these misrepresentations, a hundred million dollars seems quite egregious, and while
00:09:19.600 | misrepresenting things is never good, fortunately those misrepresentations never ended up affecting
00:09:25.360 | consumer deposits. But one more thing that I think is really fascinating is that despite this ruling
00:09:31.120 | from the SEC, one of the four SEC commissioners actually published an interesting letter in dissent
00:09:37.760 | on the SEC website that I just want to read a few excerpts from because I think it speaks
00:09:43.040 | a lot to the current state of our financial regulations. So this is from Commissioner
00:09:47.360 | Hester Pierce, "Lurking behind the legal analysis, however, is an important question. Is the approach
00:09:54.720 | we're taking with crypto lending the best way to protect crypto lending customers? I do not think
00:10:00.800 | it is, so I respectfully dissent. As an initial matter, it is difficult to understand how the
00:10:06.640 | civil penalty will protect investors. BlockFi will pay the SEC 50 million and will pay another 50
00:10:13.440 | million in connection with state settlements for the same conduct. While penalties this size are
00:10:18.640 | intended to deter bad conduct, here there is no allegation that BlockFi failed to pay its customers
00:10:24.560 | the money due them or failed to return the crypto lent to it. BlockFi's misrepresentations about
00:10:30.160 | over-collateralization are serious, but the combined $100 million penalty nevertheless seems
00:10:35.920 | disproportionate." I won't read the entire thing, but it ends with, "Working with an earnest desire
00:10:41.760 | to reach a prudent, properly calibrated regulatory outcome is important for a number of reasons.
00:10:47.600 | First, these products matter to people. A program that allows people, and not just affluent people,
00:10:53.040 | to keep their crypto assets while still earning a return is valuable to many Americans,
00:10:57.920 | as evidenced by the program's popularity in the United States to date. The investor protection
00:11:03.120 | objective of today's settlement will be poorly served if retail investors are ultimately shut
00:11:08.160 | out from the participation of these products. Second, our process speaks volumes about our
00:11:12.960 | integrity as a regulator. Inviting people to come in and talk to us, only to drag them through a
00:11:18.080 | difficult, lengthy, unproductive, and labyrinthine regulatory process casts the Commission in a bad
00:11:23.360 | light and thus makes us a less effective regulator. Third, a company that tries to do the right thing
00:11:29.440 | should be met across the table by a regulator that tries to get a sensible result in a reasonable
00:11:35.120 | timeframe. For the sake of the American public, our own reputation, and the companies that heed
00:11:40.720 | our call to come in and talk to us, we need to do better than we have so far at accommodating
00:11:46.240 | innovation through thoughtful use of the exemptive authority Congress gave us." Wow. So respect to
00:11:53.040 | Hester for such a bold statement and to the SEC for allowing her to publish it on the website.
00:11:58.800 | As for what I'm doing with my BlockFi account, my money is staying put and I'm excited for the
00:12:04.560 | launch of the BlockFi Yield account when I can continue adding deposits. Okay, finally, I want
00:12:11.120 | to wrap up with a recap and some recommendations from the quick trip Amy and I took down to
00:12:16.320 | Oceanside, California last weekend. I'd never even heard of Oceanside, but when I was trying to
00:12:21.920 | figure out how to use my $200 hotel credit for my platinum card, I stumbled upon what looked like a
00:12:27.040 | cool hotel called The Seabird, and boy was I glad I did. So for those of you who don't know, Oceanside
00:12:33.040 | is about 45 minutes north of San Diego and 45 minutes south of Orange County, so you can fly
00:12:38.720 | to either and just rent a car or take a lift. It's a small California beach town that was exactly what
00:12:44.720 | we needed for a weekend away while my parents were watching our daughter. We stayed at The Seabird,
00:12:50.080 | and honestly, I couldn't recommend it enough. It's a Hyatt property, so you can book it with points,
00:12:55.200 | or it actually wasn't that expensive when we paid in cash, well, with a card, you know what I mean,
00:13:00.400 | and if you have access to Amex's fine hotels and resorts, you get free breakfast, $125 hotel credit,
00:13:07.360 | late checkout, and a room upgrade. The food was great, the pool deck wasn't too crowded,
00:13:13.280 | and Amy used that $125 for a massage at the spa that she said was one of the best she's ever had.
00:13:19.520 | Honestly, it is such a great hotel and I am certain we'll be back. As for Oceanside, we spent most of
00:13:26.160 | the weekend eating, drinking, relaxing, hanging by the pool, and walking on the beach. It was exactly
00:13:32.560 | what we needed, and the food was fantastic. If you go, definitely check out Craft Coast Brewery
00:13:39.280 | for amazing tacos and great beers. Just make sure to get all the tacos Craft Coast style.
00:13:45.440 | Also, Carte Blanche for French-inspired Mexican. Their Caesar salad had this chili Caesar dressing
00:13:51.840 | that was so good and spicy. And finally, the Switchboard for Hawaiian-Korean fusion and
00:13:57.760 | great cocktails. Shout out to my friend and colleague, Mark Ryden, who lives in Oceanside,
00:14:03.280 | for all these recommendations. So, to wrap, don't forget that if you want to get in on the Southwest
00:14:10.000 | Companion Pass deal, head on over to allthehacks.com/southwest. And this episode is another
00:14:17.040 | experiment, so please don't expect a two-a-week to be the norm. But if you like hearing this kind
00:14:22.800 | of a short recap episode, or if you don't, just let me know. You can DM me on Twitter @hutchins,
00:14:29.440 | or on Instagram @chrishutchins, or just shoot me an email, chris@allthehacks.com.
00:14:35.200 | All right. Thank you so much for listening. See you next week.
00:14:38.000 | I want to tell you about another podcast I love that goes deep on all things money.
00:14:45.760 | That means everything from money hacks to wealth building to early retirement.
00:14:49.600 | It's called the Personal Finance Podcast, and it's much more about building generational wealth
00:14:54.720 | and spending your money on the things you value than it is about clipping coupons to save a dollar.
00:14:59.760 | It's hosted by my good friend, Andrew, who truly believes that everyone in this world can build
00:15:04.400 | wealth, and his passion and excitement are what make this show so entertaining. I know because I
00:15:09.920 | was a guest on the show in December 2022, but recently I listened to an episode where Andrew
00:15:15.600 | shared 16 money stats that will blow your mind, and it was so crazy to learn things like 35% of
00:15:21.600 | millennials are not participating in their employer's retirement plan. And that's just one
00:15:26.240 | of the many fascinating stats he shared. The Personal Finance Podcast has something for
00:15:31.040 | everyone. It's filled with so many tips and tactics and hacks to help you get better with
00:15:35.360 | your money and grow your wealth. So I highly recommend you check it out. Just search for
00:15:39.920 | the Personal Finance Podcast on Apple Podcasts, Spotify, or wherever you listen to podcasts,
00:15:44.960 | and enjoy.