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SEC fines BlockFi millions: 60 days to comply with securities laws

 


On Feb. 14, the Securities and Exchange Commission announced action against crypto lending company BlockFi for failing to register high-yield accounts that the agency considers securities.


The New Jersey company has to pay $50 million to the SEC and another $50 million to 32 states that are making similar allegations against BlockFi. The US authority has thus imposed a rarely high fine on a cryptocurrency service provider. The company also agreed not to accept new customers for the BlockFi Interest Account. It will attempt to become compliant with the Investment Company Act 1940 within the next 60 days.


Launched in March 2019, BlockFi Interest Accounts allow investors to lend their crypto assets to the platform and receive monthly interest payments of up to 9.5 percent. This means that the interest rates are significantly higher than they could be on interest-bearing deposits at most traditional financial institutions.


Despite widespread criticism of these securities laws, which date back to the 1930s and 1940s, for having limited application to digital asset products, SEC Chairman Gary Gensler hailed this court settlement as an instructive precedent for crypto lending platforms. Gensler commented in a statement:


"Today's comparison highlights the need for crypto markets to comply with well-established securities laws such as the Securities Act of 1933 and the Investment Company Act of 1940. It also demonstrates the Commission's willingness to work with crypto platforms to determine how they can become compliant with these laws." ."

Cryptocurrency lending products have received increasing suspicion at the federal and state levels since September of last year . In January it was reported that the SEC was investigating similar products such as BlockFi Interest Accounts offered by Gemini, Celsius Network and Voyager Digital. The authority wants to determine whether these securities are offered.

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