BlockFi to pay $100 million to SEC, states

BlockFi Inc., a popular crypto platform, agreed to pay $100 million to settle allegations from the Securities and Exchange Commission and state regulators that it illegally offered a product that pays customers high interest rates to lend out their digital tokens.

BlockFi sold the accounts to U.S. investors without registering them with the SEC as securities, the agency said in a Monday statement. As part of the agreement, current customers can continue to earn interest on their existing investments, but the company must stop selling the products to new American clients. The SEC said that the company is seeking to register a new crypto-lending product that will comply with the commission’s rules. 

“Today’s settlement makes clear that crypto markets must comply with time-tested securities laws,” SEC Chair Gary Gensler said in the statement. “It further demonstrates the Commission’s willingness to work with crypto platforms to determine how they can come into compliance with those laws.” 

The penalty is the largest ever imposed by the SEC on a crypto company. Gensler has consistently warned crypto trading platforms that their businesses likely need to be registered with the federal watchdog.

[More: Fake crypto offerings pose biggest investor threat, regulators say]

As part of the allegations, the SEC said BlockFi had a misleading statement on its website for more than two years concerning the level of risk in its loan portfolio and lending activity. The company, which didn’t admit or deny the regulator’s findings, will pay $50 million to the SEC and another $50 million to 32 states. 

Over the past year, securities regulators from a number of states had participated in a working group organized by the North American Securities Administrators Association to investigate BlockFi, focusing on its sale of unregistered securities to investors, according to a NASAA statement. Thirty-two states signed off on the settlement announced Monday, and “more jurisdictions are expected to follow,” according to NASAA.

[More: Crypto firms Celsius Network, Gemini face SEC scrutiny]

The post BlockFi to pay $100 million to SEC, states appeared first on InvestmentNews.

Andrew is half-human, half-gamer. He’s also a science fiction author writing for BleeBot.

Andrew Vincent
Andrew is half-human, half-gamer. He's also a science fiction author writing for BleeBot.
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