The U.S. Securities and Exchange Commission (SEC) charged Blockfi, a cryptocurrency lending platform, to court, and the latter agreed to pay $100 million in fines. The crypto lending platform will also get the. necessary registration.
On Monday, SEC stated that Blockfi had assented to paying the fine and pursuing the required registration.
The U.S. Securities and Exchange Commission (SEC) announced Monday that crypto lending platform Blockfi has agreed to pay $100 million in penalties.
Blockfi was charged for failing to register its lending products with the authorities, especially its Blockfi Interest Accounts (BIAs).
The lending protocols agreed to pay a $50 million fine immediately and stop offering its unregistered products to residents in the US. As part of the agreement, they will also pay an extra $50 million in penalties to thirty two states for similar charges.
From March 2019, the company started selling its BIAs to the public without proper authorization. SEC believes that BIAs are securities and must be authorized by them.
According to Gary Gensler, SEC Chair, he stated that,
“This is the first case of its kind with respect to crypto lending platforms. Today’s settlement makes clear that crypto markets must comply with time-tested securities laws, such as the Securities Act of 1933 and the Investment Company Act of 1940. It further demonstrates the Commission’s willingness to work with crypto platforms to determine how they can come into compliance with those laws. I’d like to thank and commend our remarkable SEC staff and state regulators for their efforts and collaboration on this settlement.”
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement noted,
“Crypto lending platforms offering securities like BlockFi’s BIAs should take immediate notice of today’s resolution and come into compliance with the federal securities laws Adherence to our registration and disclosure requirements is critical to providing investors with the information and transparency they need to make well-informed investment decisions in the crypto asset space.”
Blockfi has stated that it will pursue the necessary registration with the US SEC.
BlockFi CEO, Zac Prince believes that the settlement was a victory for the company. He stated, “From the day we started BlockFi, we have always known that strong engagement with regulators would be critical for the adoption of financial services powered by cryptocurrencies.”
“Today’s milestone is yet another example of our pioneering efforts in securing regulatory clarity for the broader industry and our clients, just as we did for our first product – the crypto-backed loan.”
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