- The lender was ordered to stop opening new accounts of its high yield lending product
- BlockFi’s Interest Accounts have faced scrutiny in Texas, Vermont, New Jersey, Alabama, and Kentucky
- Yield of up to 9.5% provoked investigation, ongoing since at least November of last year
Crypto services company BlockFi will pay the U.S. Securities and Exchange Commission (SEC) $50 million and another $50 million to various state regulators, CoinDesk reported. This is according to the terms of the settlement with the US government authorities.
No more new accounts
The lender was ordered to stop opening new accounts of its high yield lending product to most Americans as part of the settlement. Investigation into whether the product is a securities offering is still ongoing according to a published report. The settlement does not seem to affect existing accounts according to Bloomberg.
Scrutiny from regulators in multiple states
The report adds that BlockFi’s Interest Accounts have faced scrutiny from regulators in Texas, Vermont, New Jersey, Alabama, and Kentucky over the offering. As part of their investigations last year, some of these states planned or issued cease-and-desist orders.
Investigation into excessive yields
According to CoinDesk, BlockFi has been under investigation since at least November of last year over the excessive yield of its lending product. It is up to 9.5%.
In response to a question about the settlement, a BlockFi spokesperson commented:
We have been in productive ongoing dialogue with regulators at the federal and state level. We do not comment on market rumors. We can confirm that clients’ assets are safeguarded on the BlockFi platform and BlockFi Interest Account clients will continue to earn crypto interest as they always have.
The SEC has been paying a lot of attention to crypto lending in general in recent months. Reportedly, Gemini Trust, Voyager Digital, and Celsius Network are being investigated too. Celsius is also a crypto lender and Gemini is BlockFi’s main custodian.
About BlockFi
Founded in 2017 by Zac Prince and Flori Marquez, BlockFi was created to provide credit services to markets with limited access to simple financial products. BlockFi sets itself apart from other crypto service providers by pairing competitive rates with institutional-quality benefits.
BlockFi is the only independent lender with institutional backing from investors that include Valar Ventures, Galaxy Digital, Fidelity, Akuna Capital, SoFi, and Coinbase Ventures. The BlockFi team consists of professionals with a deep bench of expertise across financial services and technology with offices in New York, New Jersey, Singapore, Poland, and Argentina.
Gemini Trust Company, LLC is a New York trust company regulated by the New York State Department of Financial Services. This has not helped them avoid scrutiny, apparently.
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