Crypto lending platform BlockFi has agreed to pay $100 million to settle ongoing investigations from the U.S. Securities and Exchange Commission and multiple state securities regulators.
According to a Bloomberg report based on anonymous sources, BlockFi will also discontinue new high-yield accounts for most U.S. residents.
BlockFi spokesperson Madelyn McHugh told Decrypt it would “not comment on market rumors.” However, she added, “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.” If so, that means existing account holders might be grandfathered in.
BlockFi’s business model is offering customers high interest rates for locking up cryptocurrencies such as Bitcoin, Ethereum and Tether into savings accounts. The company then loans those funds out at even higher rates. But the SEC alleged in November that these BlockFi Interest Accounts, which can deliver yields in the range of 5 to 10%, are unregistered securities.
The SEC attention came after a quintet of state securities regulators—from Alabama, Kentucky, New Jersey, Texas and Vermont—issued show-cause or cease-and-desist orders demanding that BlockFi cease offering products to their residents.
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Other crypto lenders are also facing scrutiny from state and federal regulators, among them BlockFi competitor Celsius. Coinbase in September shuttered its planned high-yield Lend product after the SEC threatened to sue.
Under Fire From SEC, Crypto Companies Choose to Die Hard
When Coinbase CEO Brian Armstrong tweeted on Tuesday night that the SEC threatened to sue if the company launches its high-yield Lend product, Ripple CEO Brad Garlinghouse was swift to respon…
The $100 million settlement, if accurate, would be one of the largest-ever cryptocurrency enforcement actions.
In 2019, the SEC fined Block.one $24 million for its role in staging the EOS initial coin offering, a relative pittance compared to the $4.2 billion raised. In 2020, messaging app Telegram paid an $18.5 million fine and refunded investors $1.2 billion over its aborted TON token launch.
Source: Decrypt
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Crypto lending platform BlockFi has agreed to pay $100 million to settle ongoing investigations from the U.S. Securities and Exchange Commission and multiple state securities regulators.
An interesting discussion is definitely worth comment.
I do believe that you ought to post more news on this subject
Hello,
After seeing a bunch of info about the products BlockFi offers that seemed attractive at first glance, I decided to open an account. Within minutes the account was ready to take the money out from my bank. No photo identification required, by the way.
I started depositing money, and seemed easy compared to other services of this kind.
After a while, I thought it would be a good idea to secure some funds by processing two Crypto withdrawal requests.
I’ve been waiting for two days (the minimum waiting time offered for a Crypto withdrawal), but instead of processing my requests they asked me for verification via ID/Passport, photos/video using my phone..(a regular request of any CEX), but what’s strange, it’s that they will ask for Verification after they allow you to deposit large amounts of money, and not before, as any other service does. I wonder what would happen with your money in a strange scenario where (for some reason) you can’t successfully pass the Verification.
But… that was Ok. I successfully processed the verification within minutes.
Then, surprise….. Because I had two pending withdrawal requests for two different Crypto coins, even if one of them was for a very small amount being executed just for me to understand their withdrawal process, BlockFi asked me to get Verified once again. Not a different Verification process. Just the same one I had successfully executed minutes ago.
No problem! I did it again “You’re all set !”.
Within minutes, I got an email notifying that my BlockFi account was locked. No explanation other than asking to read their TOS, and the following notice….. “Should you be unable to retrieve funds through your bank, you must wait 60 days from receipt of this email before requesting a manual wire withdrawal to the source bank account. Please note that we may require identity verification to process the withdrawal. Note: Any requests made to BlockFi about your account funds will be ignored until we can process a return of funds which will only be eligible after 60 days. Do not reach out to BlockFi until after this date. ”
The 60 days have passed and even though I used every possible method to contact BlockFi, it doesn’t seem like anyone’s going to reply. (Several support tickets or by sending any kind of message using any possible form on their Help/Support pages, trying to call them using the phone number listed over their Help page, sending message via some of the previous support tickets that were used around two months ago to communicate with them..and more..
Let’s not forget that a considerable amount of money is still with BlockFi, and my account is still blocked.
If that can’t be called an extremely frustrating situation, I’m curious to hear another 🙂 .
——— UPDATE
Finally I’ve been contacted, being informed that they will return my money…soon.
This is definitely good news, but … I still find myself in a “strange” situation.
Let me explain: When BlockFi locked my account they said: “At this time, we are not able to return any funds to you directly. We’d recommend that you contact your bank and request that any ACH transfers you made to your BlockFi account be canceled and reversed. Should you be unable to retrieve funds through your bank, you must wait 60 days from receipt of this email before requesting a manual wire withdrawal to the source bank account. ”
I thought it would be faster to follow BlockFi’s advice by asking the bank to proceed as per their instructions,but a nightmare was about to start.
Shortly after asking the bank to return transfers made by me (no scam or hack involved), they decided that something is not right, ending by closing my bank accounts. PERMANENTLY.
So BlockFi will not be able to send a Wire Transfer as it will be automatically returned.
But when they blocked my account, part of the money was in Crypto balances. I wonder what are the terms used to close my positions. Crypto coins rates have changed in the past 70 days. Maybe they will process my original withdrawal requests via crypto? Or will they accept my request to send my money to another bank account in my name? Also I wonder how they could have sent a Wire Transfer to an account that does not accept wires (if they were sent to BlockFi from a NeoBank). Not the case here, but just wonder…
— UPDATE
BlockFi’s final word is: “Any funds on the account will remain locked until BlockFi receives a court order to refund the funds”
$25,000 of my money are locked and they also refuse a refund to the source bank account