Blockfi Agrees to Pay $100 Million Fine Imposed by US SEC
February 16, 2022 | Cryptocurrencies | No Comments
Cryptocurrency firm BlockFi reported last Monday that they will be paying $100 million to the U.S. Securities and Exchange Commission (SEC) and to 32 states. The settlement is related to Blockfi’s offer of crypto lending product called BlockFi Interest Accounts but without registering the retail crypto lending product with the SEC and in the 32 states. On top of the SEC violation, the Blockfi breached the registration provisions of the 1940 Investment Company Act.
About Blockfi’s Cryptocurrency Deposit-Lending Program
While the crypto firm agreed to pay SEC $50 million, while the other $50 million will be paid for similar charges in 32 states.
SEC Chair Gary Gensler mentioned how this was the first case regarding crypto lending platforms After the settlement, customers that are based in the U.S Blockfi will not be able to add interest to crypto accounts with BlockFi. Instead, existing clients can redeem interest in their existing real money holdings accounts but cannot deposit more in said assets.
The cryptocurrency firm announced how they are currently applying with SEC to offer a new crypto savings product named BlockFi Yield. They are planning to move their U.S clients to the new service unless they prefer not to. According to the company, their move gave the industry some clarity regarding regulations.
BlockFi presents itself as a bank-like platform for crypto users and is supported by Silicon Valley investor Peter Thiel. The product they offer allows their customers to earn interest on their digital currency holdings, which in turn will be used for lending.
They are promoting on their website how the yearly percentage reaches 9.25% which is higher compared to average savings rate offered by other financial institutions. According to BlockFi, they can offer as loans to large institutional investors who are inclined to pay higher interest rates just to acquire the crypto deposits