Peter Thiel-backed crypto start-up BlockFi to pay $100 million in settlement with SEC, 32 states
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Cryptocurrency firm BlockFi said Monday it has agreed to pay $100 million to the U.S. Securities and Exchange Commission and several states to settle charges related to its popular crypto lending product.
BlockFi, which is backed by Silicon Valley investor Peter Thiel, touts itself as a bank-like platform for crypto users. The company offers a popular savings product that lets clients accrue interest on their digital currency holdings.
BlockFi advertises annual percentage yields as high as 9.25% on its website, much higher than the average savings rates on offer from incumbent financial institutions. The firm says it is able to offer such rates as large institutional investors are willing to pay more to borrow the deposits.
Bitcoin and other digital assets are not regulated, however, and authorities have grown concerned by a lack of oversight for crypto-related services that more closely resemble traditional financial products that are regulated.
The SEC said Monday it had charged BlockFi with failing to register its retail crypto lending product, BlockFi Interest Accounts, and with violating the registration provisions of the Investment Company Act of 1940.
BlockFi agreed to pay the SEC $50 million to settle the charges, without admitting or denying wrongdoing or liability. It will also pay a further $50 million to 32 states over similar charges.
«This is the first case of its kind with respect to crypto lending platforms,» SEC Chair Gary Gensler said. «Today's settlement makes clear that crypto markets must comply with time-tested securities laws.»
Following the settlement, BlockFi said U.S. customers will no longer be able to open new interest accounts with the firm. Clients can continue receiving
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