BlockFi, a cryptocurrency-focused company that provides crypto credit services to its customers, stated that they intend to confidentially file a draft registration statement with the United States’ Securities and Exchange Commission (SEC), for a new crypto lending product called BlockFi Yield.
This comes after BlockFi settled to pay the SEC $100 million in settlement for offering unregistered security with high-yields, as high as 9.5% to its customers.
According to the S-1 announcement, BlockFi will pay the SEC $50 million and an additional $50 million to 32 states to settle allegations that its flagship BlockFi Interest Account (BIA) was an unregistered security.
What you should know
- According to an SEC press release, BlockFi cooperated with the government’s investigation and implemented remediation actions. However, both the SEC and state-level agreements contain no admission or denial of wrongdoing or liability.
- SEC Chair, Gary Gensler said in a statement, “This is the first case of its kind with respect to crypto lending platforms. Today’s settlement makes clear that crypto markets must comply with time-tested securities laws.”
- BlockFi explained that existing BIA clients in the U.S. will continue to receive interest payments but cannot add more crypto to their accounts as of Monday. Those accounts will automatically roll over into BlockFi Yield once the registration process is complete.
- Recall that Coinbase wanted to offer this similar service to its clients but the CEO of Coinbase, Brian Armstrong, took to Twitter to express his displeasure as to how the SEC threatened to sue the company if they went forward with the offering.
Before the SEC investigation into BlockFi in November, the Interest Accounts have faced scrutiny from securities regulators in New Jersey, Texas, Kentucky, Alabama and Vermont over the offering. Several of these states planned or issued cease-and-desist orders as part of their investigations throughout 2021.
BlockFi is still operational and a spokesperson has confirmed that its customers’ assets are safeguarded on the platform and will continue to be so.
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