Blockfi, a crypto lending platform, was charged by the U.S. Securities and Exchange Commission in an unprecedented action. Blockfi, a crypto lender, has agreed to pay $100M to resolve the charges and register.
SEC Charges Crypto Lending Platform, Blockfi
U.S. Securities and Exchange Commission (SEC), Monday announced that Blockfi’s crypto lending platform has agreed pay $100 million in fines.
The SEC explained that “In this first-of-its-kind action,” it “charged Blockfi Lending LLC with failing to register the offers and sales of its retail crypto lending product, Blockfi Interest Accounts (BIAs).”
Gary Gensler, Chairman of the SEC commented on this:
It is the first such case in relation to cryptocurrency lending platforms.
To settle the SEC’s charges, Blockfi agreed to pay a $50 million penalty and cease its unregistered offers and sales of the lending product. Similar charges were also settled by Blockfi, who agreed to pay additional $50m in fines for 32 states.
The SEC said that Blockfi sold BIAs from March 4, 2019 to today. In return for monthly interest, investors lent crypto assets to Blockfi.
According to the SEC BIAs must be registered at the Commission as securities. Blockfi, according to the Securities Regulator, was unregistered for over 18 months.
Blockfi, as part of the agreement with the SEC agreed to register its crypto lending product within sixty days. A parent company of Blockfi also plans to register the sale and offer of a new product under the Securities Act of 1933.
“Today’s settlement makes clear that crypto markets must comply with time-tested securities laws,” SEC Chair Gensler opined, elaborating:
It further demonstrates the Commission’s willingness to work with crypto platforms to determine how they can come into compliance with those laws.
Coinbase, an exchange that is listed on the Nasdaq was in trouble last September with the SEC for its plans to launch lending products. Coinbase abandoned its plans after being threatened by the Securities Watchdog with a lawsuit if the launch was carried out.
Blockfi must pay $100 million to regulators in penalties for selling an unregistered product of lending. Comment below to let us know your thoughts.
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