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Crypto lending platform BlockFi could be fined up to $100 million

According to a Bloomberg report citing knowledgeable sources, high-yield crypto lending platform BlockFi would be ordered to pay $100 million in fines.

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Initially, it will have to pay 50 million to the Securities Exchange Commission (SEC) for offering unregistered securities to investors. The report also details that BlockFi would have to pay a supplementary  $50 million to various state regulators.

 

BlockFi: Solving A Regulatory Concern?

The crypto lending product offering has not always had a warm reception from the US stock exchange authority. We remember that last year, the SEC was unleashed against Coinbase which wanted to launch a credit service on its platform. The reason the US regulator is going after these crypto lending platforms is that they want these types of products to be categorized as “securities.” What crypto companies do not necessarily see the same eye.

 

In the case of BlockFi, the company seems to be resigned to reaching an agreement with the American stock market authority if we believe Bloomberg sources. BlockFi would try to settle with regulators concerning the allegations that its high-yield crypto lending offerings are illegal. By next week, the SEC is expected to release an official notice to confirm the sanctions granted to the New Jersey-based crypto lending platform.

Among other things, the sources of the American newspaper indicated that as part of the agreement with the regulators, BlockFi will no longer be able to open new paid accounts for most Americans.

Asked about Bloomberg’s report, a BlockFi spokesperson simply said:

We are in constant and productive dialogue with regulators at the federal and state level. We do not comment on market rumors. We can confirm that client assets are backed up to the BlockFi platform and that BlockFi Interest Account clients will continue to earn crypto interest as they always have.

 

The SEC Goes On A Crusade Against Crypto Companies

 

This year, the Security Exchange Commission is more determined than ever to expand its functions on the crypto-verse. The SEC, through its chairman, Gary Gensler, says it is ready to hunt down any cryptocurrency companies that offer financial services without adhering to the benchmark investor protection rules that banks, brokers, and other long-established entities must comply with.

 

Crypto lending platforms like Gemini, Celcius, and Voyager Digital Ltd are on the SEC’s radar for similar issues. The president of the SEC knows that his body alone will not be able to address the problem of crypto regulation, especially for the offer of unregistered securities. Because opinions differ on how to regulate the industry in the United States. Gensler said it would be very important to work with Congress on the crypto regulatory issue to better address the issue. He stated:

We will work with the Commodity Futures Trading Commission (CFTC) when there are commodity tokens. While many of them are securities, some may fall under their purview. We work together as two federal agencies.

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