Decentralized finance (DeFi) lending protocol ‘BlockFi‘ has been told to pay $100 million in settlements to the Securities and Exchange Commission as a result of a probe into whether the platform had been selling unregistered securities.
BlockFi to Pay $100 Million to the SEC
BlockFi’s lending product offers yields as high as 9.5% on Bitcoin, Ethereum, and Tether in its savings accounts. In return, BlockFi lends out the cryptos under its custody at even higher rates.
In November 2021, the SEC alleged that the yield services offered by BlockFi interest accounts were in fact unregistered securities.
Three months later, the New Jersey-based company has been instructed to pay a $50 million penalty fee to resolve Securities and Exchange Commission (SEC) charges, and an additional $50 million settlement to state regulators.
BlockFi will also be prevented from offering new accounts for its high yield lending product to most Americans. As it stands, existing accounts will not be affected by the settlement.
The lending service has come under scrutiny from securities regulators in New Jersey, Texas, Kentucky, Alabama, and Vermont over the offering, and while some states have ordered a cease and desist order to BlockFi, others yet plan to implement one.
On the Flipside
- Ripple has made significant progress in its 14 month long case with the SEC, as the judge ordered that several documents be unsealed
Why You Should Care
The U.S. has been increasingly cracking down on crypto firms offering crypto lending services. Among the affected projects are Voyager Digital, Gemini Trust, and the Celsius Network.