BlockFi to Pay $100M Penalty and Stop Opening New High Yield Bitcoin Accounts: Report

Crypto lending platform BlockFi has agreed to pay $100 million to settle ongoing investigations by the United States Securities and Exchange Commission and several state securities regulators.

According to a Bloomberg report based on anonymous sources, BlockFi will also remove new high yield accounts for most US residents.

BlockFi spokeswoman Madelyn McHugh said Decrypt he would not “comment on market rumours”. However, she added, “We can confirm that client assets are protected on the BlockFi platform and that BlockFi Interest Account clients will continue to earn crypto interest as they always have. ” If so, that means existing account holders could be grandfathered.

BlockFi’s business model offers customers high interest rates to lock in cryptocurrencies such as Bitcoin, Ethereum and Attached in savings accounts. The company then lends these funds out at even higher rates. But the SEC alleged in November that these BlockFi interest accounts, which can offer returns in the range of 5-10%, are non-registered securities.

The SEC’s attention came after a quintet of state securities regulators – from Alabama, Kentucky, New Jersey, Texas and Vermont – issued show cause or to cease and desist demanding that BlockFi cease offering products to their residents.

Other crypto lenders are also under scrutiny from state and federal regulators, including BlockFi competitor Celsius. Coinbase shut down its planned high-yield loan product in September after the SEC threatened to sue.

The $100 million settlement, if true, would be one of the biggest cryptocurrency enforcement actions ever.

In 2019, the SEC fined Block.one $24 million for his role in staging the initial EOS coin offering, a relatively paltry sum compared to the $4.2 billion raised. In 2020, messaging app Telegram paid an $18.5 million fine and reimbursed $1.2 billion to investors for its failed launch of the TON token.

https://decrypt.co/92789/blockfi-pay-100m-penalty-stop-opening-new-high-yield-bitcoin-accounts-report

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