The crypto-lending platform BlockFi will pay $100 million in fines to settle a dispute with the SEC and state financial regulators. The report, by Bloomberg, cites people familiar with the matter.
According to the publication, the company will pay $50 million to the SEC and a further $50 million to state regulators. Under the agreement BlockFi will not offer U.S. residents services related to the BIA.
The deal with authorities could be announced as early as next week.
After Bloomberg’s report, BlockFi said that holders of the BIA will continue to accrue interest on their accounts.
Statement from BlockFi: pic.twitter.com/gcqbg8zqAv
— BlockFi (@BlockFi) February 12, 2022
“We are engaged in constructive dialogue with regulators at the federal and state levels. We do not comment on market rumors. We can confirm that client funds are safeguarded on the BlockFi platform, and BIA holders will continue to earn crypto interest, as before,” the statement said.
According to BlockFi’s site, BIA offers an annual yield of 9.5% — a figure that significantly exceeds the average interest rate on U.S. bank savings accounts (0.06%).
In July 2021, BlockFi faced action from state financial regulators. The New Jersey Bureau of Securities banned the company from opening new BIA accounts for its residents.
Later, the Alabama regulator accused the company of selling unregistered securities. Soon it emerged that BlockFi was being probed in Vermont.
In September, BlockFi chief executive Zac Prince stated that the company’s interest-account services do not fall within securities laws. He said the company does not intend to make decisions based on the views of state regulators — the matter depends on federal authorities.
In November, Bloomberg reported that the SEC initiated an investigation into BlockFi. The regulator was allegedly examining the legality of offering the BIA without registration with the agency.
Earlier, in September 2021, the Commission warned the Bitcoin exchange Coinbase of possible legal action if it launched crypto-savings accounts based on USD Coin (USDC). Subsequently the company abandoned its plans.
In January 2022, media reported that the SEC was investigating the lending platforms Voyager, Gemini and Celsius Network. The regulator was allegedly examining the legality of offering interest on deposits in digital assets by them.