Crypto lending company BlockFi has agreed to a $100 million settlement with the Security and Exchange Commission (SEC) over its interest-generating accounts, the SEC said in a press release on 14 February.
According to the announcement, BlockFi has agreed to pay $50 million in settlements to the U.S. regulator for its failure to register its BlockFi Interest Accounts (BIA), and an additional $50 million to 32 U.S. states that had brought similar charges against the company. Totaling a $100 million, the fine is one of the largest penalties imposed on a crypto service provider in the U.S.. SEC chairman Gary Gensler said in a statement:
“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.”
The crypto lending company has also agreed to stop offering its unregistered BlockFi Interest Accounts service to people within the U.S., and now has 60 days to try and bring it into compliance with the Investment Company Act of 1940. Existing U.S. BIA clients, however, will continue to receive interest payments from the platform, but are no longer able to add more crypto to their accounts. BlockFi further noted that once the SEC registration process has been completed, these accounts will be automatically exchanged for BlockFi Yield ones.
BlockFi’s BIA service was launched back in 2019, allowing investors to lend their crypto assets to the platform in exchange for monthly interest payments of up to 9.5%, which is significantly higher than the offers from traditional financial institutions. BlockFi has not been the only company targeted for its lending product. Back in September 2021, the SEC threatened to sue crypto exchange Coinbase if it proceeded with the launch of its “Lend” program, which intended to provide a 4% annual yield returns to USDC lenders on Coinbase.