The platform will pay $50 million to the SEC and the rest to state regulators.
It cannot open new accounts for most Americans.
Out of the total settlement proceeds, $50 million will go to the SEC, while the rest will be distributed among several state regulators of New Jersey, Texas, Kentucky, Alabama and Vermont, the anonymous sources of the publication revealed. The official announcement of the settlement is expected to come out this week.
Some of these financial market regulators even issued cease-and-desist orders against BlockFi.
Though the crypto platform will also have to stop opening new accounts under the settlement agreements, it will not impact the existing clients.
The Business of Crypto Lending
BlockFi allows retail users to lend their cryptocurrencies for yields as high as 9.5 percent. The company executives earlier explained that it is able to offer such a high yield as institutional investors are even ready to offer even higher interests against their crypto borrowings.
But, the companys business remains unregulated that raised eyebrows of many American regulatory agencies over the recent months. The platform is facing regulatory scrutiny since at least November 2021.
“We have been in productive ongoing dialogue with regulators at the federal and state level. We do not comment on market rumors,” a BlockFi spokesperson told media when commenting on reports of the settlement. “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.”
Apart from BlockFi, other crypto lending platforms in the United States are also facing regulatory scrutiny. Several state regulators took the lead in taking action against the crypto lending schemes. The SEC is also reportedly probing Celsius Network, Voyager Digital and Gemini Trust.
Meanwhile, BlockFi recently received a license in Bermuda that will help the companys global expansion push.
