BlockFi Lending LLC held as much as $14.7 billion in assets at its peak last year.
Photo: Gabby Jones/Bloomberg News
WASHINGTON—A cryptocurrency company that allowed nearly 600,000 users to earn interest by lending their holdings to other traders will pay $100 million to settle claims that its product violated investor-protection laws.
BlockFi Lending LLC, which held as much as $14.7 billion in assets at its peak last year, will pay the highest fine ever agreed to by a cryptocurrency company, Securities and Exchange Commission officials said. The settlement is the first enforcement action targeting a crypto lending platform, according to the SEC. The company neither admitted nor denied wrongdoing.
BlockFi and its competitors amassed customers in recent years as crypto traders discovered they could reap yields much higher than interest rates paid by most banks or bond issuers. The company didn’t seek approval to act as a bank or money manager, and its interest-bearing accounts weren’t registered with federal bank or securities regulators.
BlockFi will stop offering the accounts in the U.S. and will seek to register a new product, BlockFi Yield, under SEC rules.
BlockFi will pay half of the $100 million penalty to 32 states, some of which accused the company last year of violating rules and told it to stop doing business in their state. New Jersey was the first state to issue a cease-and-desist order to BlockFi over the loan accounts.
Write to Dave Michaels at [email protected]
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