The United States Securities and Exchange Commission (SEC) has charged cryptocurrency lending platform Blockfi in a one-of-a-kind action. The crypto lender has agreed to pay $100 million to settle the fees and pursue necessary registrations.
SEC charges crypto lending platform Blockfi
The U.S. Securities and Exchange Commission (SEC) announced Monday that crypto lending platform Blockfi has agreed to pay $100 million in penalties.
The SEC explained that “in this first-of-its-kind action” it “accused Blockfi Lending LLC of failing to register offers and sales of its retail crypto lending product, Blockfi Interest Accounts (BIAs). “.
SEC Chairman Gary Gensler commented:
This is the first such case for crypto direct lender platforms.
To settle the SEC charges, Blockfi agreed to pay a $50 million fine and cease its unregistered offerings and sales of the loan product. The company also agreed to pay an additional $50 million in fines to 32 states to settle similar charges.
Blockfi offered and sold BIAs to the public from March 4, 2019 until today, the SEC detailed. Investors loaned their crypto assets to the company in exchange for monthly interest payments.
According to the SEC, BIAs are securities and must be registered with the Commission. Additionally, the securities regulator said Blockfi has operated for more than 18 months as an unregistered investment company.
As part of the settlement with the SEC, Blockfi agreed to pursue registration of its cryptocurrency lending product within 60 days. Its parent company also intends to register under the Securities Act of 1933 the offering and sale of a new loan product.
“Today’s settlement makes it clear that crypto markets must comply with proven securities laws,” SEC Chairman Gensler said, adding:
This further demonstrates the Commission’s willingness to work with crypto platforms to determine how they can comply with these laws.
In September last year, Nasdaq-listed cryptocurrency exchange Coinbase got into trouble with the SEC over its plan to launch a lending product. However, after the securities watchdog threatened to sue the company if it went ahead with the launch, Coinbase shelved its plan.
What do you think about Blockfi having to pay regulators $100 million in fines for offering an unregistered loan product? Let us know in the comments section below.
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