BlockFi charged $100m

BlockFi has agreed to pay $100m in fines and change their business structure, after a case was brough against by the US Securities and Exchange Commission (SEC).

BlockFi has been charged for running an unregistered company for two years and has received a cease and desist order for all unregistered token sales and offers.

SEC chair Gary Gensler told the FT: “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. I’d like to thank and commend our remarkable SEC staff and state regulators for their efforts and collaboration on this settlement.”

BlockFi must comply with all changes within two months of the closed case. The platform will pay $50m to the SEC in fines and another $50m to the 32 states they were operational in.

BlockFi has stated that many of their products will be restricted to accredited investors only. Accredited investors in the US must own a large amount of capital and be registered. This limits the availability to those who already have a lot of money.

BlockFi was targeted due to the loan offerings it made available to their clients. The SEC claims the loans do not properly educate their customers on the risks associated with the product.

Many other US based exchanges wanted to implement cryptocurrency loans but were warned against offering such products due to current compliance laws in the country.

This is not the first time restrictions have been put on an exchange but it is the first time a large fine was included. Binance was the last exchange forced to close down all services in the US due to unregistered securities trading.

Decentralized finance has been quick to make big changes to traditional finance. Products like decentralized collateralized loans have boomed in popularity in recent years.

Centralized exchanges wish to jump on the opportunity to offer DeFi products but have been restricted by regulations.

Many crypto enthusiasts believe this is unfair as many of the staking products give higher returns over any product offered by traditional banks.

Source

Updated: 02/16/2022 — 18:00