The Alabama Securities Commission (ASC) has accused the crypto-lending platform BlockFi of selling unregistered securities. The regulator gave the company a month to explain why the state should not halt its operations. CBS 42 reports this, citing the regulator’s press release.
The ASC noted that BlockFi presents itself as a ‘US-regulated entity’, but in fact the company is not registered with any agency overseeing securities markets.
The platform holds more than 35 licenses for money transfers and provision of other financial services. It is also authorised to issue loans in 17 U.S. states, but cannot offer investment services.
The ASC’s wording indicates that the agency regards the BlockFi Interest Account (BIA) crypto-savings accounts as unregistered securities.
The platform’s popularity is largely driven by the high yields on BIA, which can reach up to 8% for some stablecoins and around 6% for Bitcoin. This is above the rate accrued on deposits in savings accounts at U.S. banks.
BlockFi stated that it is aware of the notice and “actively engaging with regulators around the world, including in Alabama.” The company does not agree with ASC’s position, arguing that BIA are not securities.
[2/2] Our stance hasn’t changed — the BlockFI Interest Account is not a security.
— BlockFi (@BlockFi) July 21, 2021
The company has 28 days to respond to the agency.
The New Jersey Bureau of Securities barred the crypto-lending platform from opening new BIA accounts for state residents. The order was due to take effect on July 22, but the regulator postponed its enforcement by a week.
NJ BOS has postponed the effective date of its previous order, which calls for preventing the creation of all new BlockFi Interest Accounts, to Thursday, July 29, 2021. The order does not impact our current BIA clients or any of our other products.
— Zac Prince (@BlockFiZac) July 21, 2021
In June the SEC accused the crypto startup Loci and its founder John Wise of selling unregistered securities.
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