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Crypto lending platform BlockFi has reached a settlement of $100 million with the US Securities and Exchange Commission (SEC) and other state securities regulators who were investigating the company for selling unregistered securities. According to a Bloomberg report, out of the total settlement proceeds, $50 million will go to the SEC, while the rest will be distributed among several state regulators of New Jersey, Texas, Kentucky, Alabama and Vermont. Additionally, as part of the settlement, BlockFi will discontinue offering high interest-yielding accounts for its US customers. BlockFi offers high-interest rates for locking up cryptocurrencies such as Bitcoin, Ethereum into a user's savings accounts. The company then loans those funds out at even higher rates. The firm then came under investigation from the SEC in November, 2021 over allegations that these BlockFi Interest Accounts which deliver yields up to 10% are unregistered securities.
“We have been in productive ongoing dialogue with regulators at the federal and state level. We do not comment on market rumors,” a BlockFi spokesperson commented on the settlement. “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.”
Scrutiny Over High-Yielding Crypto Product
Besides BlockFi, other crypto lending platforms in the United States have also come under regulatory scrutiny from state and federal regulators. For instance, the SEC is reportedly investigating Celsius Network, Voyager Digital, and Gemini Trust over their lending product. Meanwhile, Coinbase in September announced the closure of its high-yielding Lend product after the SEC threatened to sue if the company went ahead with its launch plans.