BlockFi to Pay $100 Million to Settle with SEC and State Regulators

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Odaily Translator | Nian Yin Si Tang

, by Matt Robinson, Joe Light & Zeke Faux

Odaily Translator | Nian Yin Si Tang

Crypto asset lending platform BlockFi Inc. is preparing to pay $100 million to settle charges from the U.S. Securities and Exchange Commission (SEC) and state regulators, according to people familiar with the matter. The allegations allege that BlockFi illegally offered a product that paid customers high interest rates to lend their digital tokens.

The penalties are some of the harshest against crypto companies in the U.S. crackdown on the cryptocurrency industry. U.S. SEC and state investigators have been looking into whether the accounts offered by BlockFi are similar to securities that should be registered with the regulator.

Cryptocurrency lenders have recently come under increasing scrutiny for attracting tens of billions of dollars in deposits by promising rates of return far higher than traditional savings accounts. As part of an agreement with regulators, BlockFi will no longer be able to open new interest-bearing accounts for most Americans, the people said.

“We have been in productive dialogue with regulators at the federal and state levels. We do not comment on market rumours,” said BlockFi spokeswoman Madelyn McHugh. “We can confirm that our clients’ assets are protected on the BlockFi platform, BlockFi Interest Account customers will continue to earn cryptocurrency interest as they have always done."

A spokesman for the SEC declined to comment.

Jersey City, New Jersey-based BlockFi will pay a $50 million fine to the U.S. SEC and a total of $50 million to the states, the person said, speaking on condition of anonymity. Several firms, including Celsius Network and Gemini Trust Co., are widely popular with retail investors for paying yields that sometimes exceed 10 percent, the sources said.to reportLast year, securities regulators in several U.S. states took enforcement action against BlockFi and Celsius over the accounts, saying the firms were selling unregistered securities and posed undisclosed risks. Bloomberg this January

to report

The SEC is also reviewing Celsius, Gemini and Voyager Digital Ltd. on similar issues, the report said.

At the time, a Gemini spokesperson said the company was cooperating with an “industry-wide investigation” into crypto yield products; Celsius said it was working with regulators to “fully comply with the law”; a Voyager spokesperson Ongoing communication with regulators has historically been true for companies, he said. The SEC has not charged the companies with any wrongdoing.

The SEC had separately warned Coinbase Global Inc., the largest U.S. cryptocurrency exchange, that it would sue if it went ahead with a loan product, prompting the company to suspend the program in September.