In what will be one of the toughest sanctions against a cryptocurrency firm, details have now emerged that leading cryptocurrency lending platform BlockFi will pay a $100 million fine to the United States Securities and Exchange Commission (SEC). U.S. states government
The company decided to pay the fine in an attempt to settle an ongoing investigation into its activities by the commission.
BlockFi to stop the creation of new accounts
The investigation began following allegations that the company was illegally offering a product that pays customers high interest rates for lending their digital tokens, according to people familiar with the matter.
Aside from paying this fine, Bloomberg reported that the firm would also stop creating new high-yield accounts for US residents.
Speaking about the development, company spokeswoman Madelyn McHugh insisted that they would not comment on market rumours. However, McHugh confirmed that her client’s assets were still safe on the platform.
BlockFi offers customers high interest rates to lock their crypto assets like Bitcoin, Ethereum, and Tether in traditional bank-like savings accounts. These crypto assets are then loaned out at higher rates to other clients. According to the SEC, BlockFi’s actions count as exposing its US customers to unregistered securities.
The SEC was forced to launch an investigation into BlockFi’s operations when regulators from Alabama, Kentucky, New Jersey, Texas, and Vermont issued a cease and desist order and showed cause to the crypto firm. This action prompted the federal regulator to investigate how BlockFi operates its business.
Notably, this is not the first time the SEC has reacted strongly to crypto lending cases. In one of our previous reports, we revealed that Coinbase was forced to cancel its plans for a similar service after the commission led by Gary Gensler threatened to sue the crypto exchange if it went ahead with its plan.
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This post Crypto Lending: BlockFi to Pay a $100 Million Fine to the SEC
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