According to a report published by Bloomberg, crypto lending platform BlockFi has agreed to pay the SEC $50 million and stop opening new accounts of its high yield lending product to most Americans as part of the settlement of an ongoing inquiry into whether the service is a securities offering or not.
Existing accounts do not seem to be affected by the settlement, as per Bloomberg’s report.
The report went on to reveal that BlockFi has also agreed to pay another $50 million to state regulators. Securities regulators in New Jersey, Texas, Kentucky, Alabama, and Vermont have all looked into the BlockFi Interest Accounts. Throughout the year 2021, several of these states planned or issued cease-and-desist orders as part of their inquiries.
Since November 2021, the company has been under investigation for the lending offer, which reportedly offers yields as high as 9.5%.
When queried about the settlement report, a representative from the crypto lending company simply said, “We have been in ongoing productive dialogue with regulators at the federal and state level. We do not comment on market rumors. We can confirm that clients’ assets are safeguarded on the BlockFi platform, and BlockFi Interest Account clients will continue to earn crypto interest as they always have.”
Regulatory pressure on crypto lending platforms
In recent months, the United States SEC has been closely scrutinizing crypto lending in general. The SEC is reportedly looking into Voyager Digital, Gemini Trust, and Celsius Network, a fellow cryptocurrency lender.
In October last year, Celsius and Nexo grabbed many eyes when the office of the Attorney General of the State of New York directed the two lending firms to halt their operations in the state. As TheCoinRise reported, the two companies were reportedly found to be violating the Martin Act. The news came just after Tether was reportedly found lending $1 billion to Celsius.
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