First for SEC: Crypto Lending Platform Charged — Blockfi Agrees to Pay $100 Million in Penalties

The U.S. Securities and Exchange Commission (SEC) has charged cryptocurrency lending platform Blockfi in a first-of-its-kind motion. The crypto lender has agreed to pay $100 million to settle the costs and pursue mandatory registrations.

SEC Charges Crypto Lending Platform Blockfi

The U.S. Securities and Exchange Commission (SEC) introduced Monday that crypto lending platform Blockfi has agreed to pay $100 million in penalties.

The SEC defined that “In this first-of-its-kind motion,” it “charged Blockfi Lending LLC with failing to register the affords and gross sales of its retail crypto lending product, Blockfi Interest Accounts (BIAs).”

SEC Chairman Gary Gensler commented:

This is the primary case of its sort with respect to crypto lending platforms.

To settle the SEC’s expenses, Blockfi agreed to pay a $50 million penalty and stop its unregistered affords and gross sales of the lending product. The firm additionally agreed to pay an extra $50 million in fines to 32 states to settle comparable expenses.

Blockfi supplied and bought BIAs to the general public from March 4, 2019, till right this moment, the SEC detailed. Investors lent their crypto property to the corporate in alternate for month-to-month curiosity funds.

According to the SEC, BIAs are securities and should be registered with the Commission. Furthermore, the securities regulator stated that Blockfi operated for greater than 18 months as an unregistered funding firm.

As a part of the settlement with the SEC, Blockfi agreed to pursue the registration of its cryptocurrency lending product inside 60 days. Its mum or dad firm additionally intends to register underneath the Securities Act of 1933 the supply and sale of a brand new lending product.

“Today’s settlement makes clear that crypto markets should adjust to time-tested securities legal guidelines,” SEC Chair Gensler opined, elaborating:

It additional demonstrates the Commission’s willingness to work with crypto platforms to find out how they’ll come into compliance with these legal guidelines.

In September final 12 months, the Nasdaq-listed cryptocurrency alternate Coinbase obtained into hassle with the SEC over its plan to launch a lending product. However, after the securities watchdog threatened to sue the corporate if it proceeded with the launch, Coinbase shelved its plan.

What do you consider Blockfi having to pay regulators $100 million in fines for providing an unregistered lending product? Let us know within the feedback part under.