In a surprising turn of events, the U.S. Securities and Exchange Commission (SEC) has agreed to waive a $30 million fine that was imposed on BlockFi, a bankrupt crypto lending platform, until it repays its investors. This decision is part of a settlement that BlockFi reached with the SEC in February 2022, after being charged with violating securities laws and making false statements about its crypto lending product.
BlockFi was one of the most popular platforms that offered high interest rates to crypto investors who lent out their digital assets. However, the company ran into trouble when FTX, a crypto exchange that BlockFi had exposure to, collapsed in November 2022. BlockFi filed for bankruptcy shortly after, leaving its customers unable to withdraw their funds.
The NJBS had issued a cease-and-desist order to BlockFi in July 2021, alleging that the BIA was an unregistered security offering that violated state securities laws. BlockFi had contested the order and maintained that the BIA was not a security, but a lawful and regulated product. BlockFi had contested the order and maintained that its product was lawful and compliant with all applicable regulations.
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According to a press release from BlockFi, the settlement agreement involves BlockFi paying a one-time fine of $30 million to the NJBS and agreeing to stop offering the BIA product to new customers in New Jersey as of January 31, 2022. Existing customers in New Jersey will be able to continue using the BIA product until March 31, 2022, after which they will have to withdraw their funds or transfer them to other BlockFi products or services.
BlockFi also stated that it will work with the NJBS to provide additional disclosures and information to its customers regarding the BIA product and its risks. BlockFi CEO Zac Prince expressed his gratitude to the NJBS for reaching a resolution that allows BlockFi to continue serving its existing customers in New Jersey and providing them with access to innovative and secure crypto products.
The U.S. Securities and Exchange Commission (SEC) has recently stepped up its efforts to regulate the crypto industry, launching lawsuits against two of the world’s largest crypto exchanges, Coinbase and Binance. The SEC claims that these exchanges have violated its rules by offering unregistered securities to U.S. investors without registering them with the agency. These lawsuits could have significant implications for the future of crypto regulation in the US and beyond.
In a landmark victory for the crypto industry, Coinbase has won a lawsuit against the Securities and Exchange Commission (SEC) over its alleged violation of market rules. The SEC had accused Coinbase of operating as an unregistered broker and facilitating the trade of unregistered securities on its platform. Coinbase had denied the allegations and argued that it had received tacit approval from the SEC when it went public in 2021.
The lawsuit, which was filed by the SEC in June 2023, had cast a shadow over Coinbase’s business and reputation, as well as the wider crypto sector. The SEC had claimed that Coinbase had made billions of dollars by easing the sale of crypto assets but deprived investors of significant protections. The SEC had also sued Binance, the world’s largest crypto exchange, for similar reasons.
However, on Friday, a federal judge in New York ruled in favor of Coinbase and dismissed the SEC’s complaint. The judge found that the SEC had failed to prove that the tokens traded on Coinbase were securities under the federal law. The judge also noted that the SEC had not provided clear guidance to the crypto industry on how to comply with its regulations.
