In a piece of latest news, the popular crypto platform, BlockFi Inc. agreed to pay $100 million to the Securities and Exchange Commission and state regulators over allegations it illegally offered a product that pays customers high-interest rates to lend out their digital tokens.
In the present scenario, the US regulators are making it clear for crypto companies to positively follow conventional rules. Recently, Crypto lender BlockFi has settled with the Securities and Exchange Commission over charges the company allegedly offered interest accounts without registering them under the Securities Act. As a result, the company will pay $100 million in penalties, including $50 million to settle charges from 32 states.
The Lender Agreement
BlockFi Inc. sold the accounts to U.S. investors without registering them with the SEC as securities. As part of the agreement, current BlockFi customers can continue to earn interest on their existing investments, but the company must not sell the products to new American clients. The company has 60 days to seek to comply with SEC regulations and it’s also seeking to register a new crypto-lending product that will satisfy the agency’s rules.
The company has also agreed to register for the sale of a new product, Yield. It has further promised to comply with SEC rules in the next 60 days. The company was reportedly selling unregistered crypto interest accounts from March 2019 until the present date, and made “false and misleading” claims about the risks from lending.
Sharing the Settlement Victory
In a blog post, BlockFi cast the settlement as a form of victory. The company saw this as providing “increased regulatory clarity” that helped it and the industry move forward. US-based customers of its internet accounts won’t be allowed to add new assets until BlockFi Yield is registered, at which point their accounts will switch over.
The charges and settlement are the SEC’s first leveled against a crypto lender and reflect a clear goal: the Commission is willing to accept these services as long as they honor rules deemed applicable. The move also comes in sync with a broader effort by American officials to clarify the legal status of crypto assets. BlockFi’s fate, in that regard, might help other crypto businesses start on a better footing.