Popular crypto lender BlockFi will have to pay $100 million in penalties in the US for operating as an unregistered investment company.
BlockFi’s interest accounts, which let users earn returns on cryptocurrencies like Bitcoin and Ethereum, were found to be unregistered securities.
Warning that the crypto lending ecosystem should take immediate notice of today’s resolution and comply with US securities laws, the Securities and Exchange Commission (SEC) charged BlockFi Lending with failing to register the offers and sales of its retail crypto lending product.
SEC on Monday charged BlockFi with violating the registration provisions of the Investment Company Act of 1940.
BlockFi agreed to pay a $50 million penalty, cease its unregistered offers and sales of the lending product, BlockFi Interest Accounts (BIAs), and attempt to bring its business within the provisions of the Investment Company Act within 60 days.
BlockFi also agreed to pay an additional $50 million in fines to 32 states to settle similar charges.
“We intend for BlockFi Yield to be a new, SEC-registered crypto interest-bearing security, which will allow clients to earn interest on their crypto assets,” said Zac Prince, CEO and Founder of BlockFi.