BlockFi to Pay $100M in Penalties Over Interest Accounts

  • BlockFi has agreed to stop onboarding new U.S. customers to its service, though existing U.S. account holders will continue to receive interest payments from the platform.
  • The company will also attempt to bring its BlockFi Interest Accounts into compliance with the Investment Company Act of 1940 within the next 60 days.


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.

Related Coverage
SEC Reportedly Probing Coinbase Over Token Listings
  • “People familiar with the matter” have said the regulator is investigating Coinbase for allegedly allowing U.S. citizens to trade unregistered securities.
  • The exchange denied the assets were securities, saying that its listing process had been reviewed and approved by the SEC themselves.
July 26, 2022, 8:57 AM
Coinbase co-founder and CEO Brian Armstrong

Coinbase co-founder and CEO Brian Armstrong talking about the future of Bitcoin at TechCrunch Disrupt Europe in October, 2014. TechCrunch

Tesla Recorded $64M Profit From Q2 BTC Sale
  • The company’s 10-Q filing with the SEC revealed Tesla had made a $64 million profit from selling its Bitcoin in the second quarter of 2022.
  • The electric car manufacturer also reported an impairment loss of $170 million, which was the result from changes to the carrying value of its BTC holdings.
Vauld Seeks Protection From Creditors in Singapore
  • The crypto lending and trading platform noted it had filed for a moratorium order as to give its management more time to develop a proper restructuring plan.
  • Vauld paused all deposits, withdrawals, and trading on its platform on 4 July due to volatile market conditions.