Decentralized finance (DeFi) lending protocol, BlockFi, has been told to pay $100 million in settlements to the Securities and Exchange Commission over a probe into 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 crypto under its custody at even higher rates.
However, in November 2021, the SEC alleged that these yield services offered by BlockFi Interest Accounts are unregistered securities.
Three months later, the New Jersey-based company has been instructed to pay $50 million to resolve Securities and Exchange Commission (SEC) charges and an additional $50 million in a settlement with the state regulators.
In addition, BlockFi will stop opening new accounts for its high yield lending product to most Americans. However, at the moment, existing accounts are not 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. While some states have ordered a cease and desist order on BlockFi, others 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 several documents be unsealed
Why You Should Care
The U.S. has been increasingly cracking down more on crypto firms offering crypto lending, including Voyager Digital, Gemini Trust, and Celsius Network.
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