Crypto lender BlockFi will pay the U.S. Securities and Exchange Commission (SEC) $50 million and stop opening new accounts of its high-yield lending product to most Americans as part of a settlement of an ongoing investigation into whether the product is a securities offering, according to a published report.
The settlement, as described by Bloomberg, does not appear to affect existing accounts.
BlockFi will also pay another $50 million to various state regulators, according to the report. The BlockFi 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.
The company has been under investigation since at least November over the lending product, which offers yields as high as 9.5%.
When asked about the report of the settlement, a BlockFi spokesperson would only say, "We have been in productive ongoing dialogue with regulators at the federal and state level. We do not comment on market rumors. 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."
Crypto lending in general has come under close SEC scrutiny in recent months. The SEC is reportedly investigating Voyager Digital, Gemini Trust and fellow crypto lender Celsius Network.
CORRECTION (Feb. 12 20:22 UTC): Makes clear that, according to the report, under the settlement BlockFi would be prohibited from opening new high-yield accounts to most Americans; existing accounts appear to be unaffected. Adds statement from BlockFi spokesperson.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.