BlockFi to pay $100m in settlement with US financial watchdog
Crypto lender BlockFi must pay $100m as part of a settlement with the US financial watchdog over its high yield lending product.
The company has been under investigation over the lending product since November 2021 with the account offering yields as high as 9.5 per cent. The settlement, which was first reported in Bloomberg, prevents the lender from opening new accounts for some US customers, but does not appear to affect existing accounts.
BlockFi will pay $50m to the US’ Securities and Exchange Commission (SEC) while an additional $50m will go to state regulators.
BlockFi Interest Accounts are under scrutiny from regulators across the US, including New Jersey, Texas and Kentucky, over the product with several states issuing cease and desist orders.
The lender is among several crypto companies, including Celsius Network and Gemini Trust, that have become popular with retail investors for paying yields which sometimes exceed ten per cent. The SEC has been quick to clamp down on yield accounts, with crypto exchange Coinbase abandoning plans for a lending product in September after the regulator warning it would sue.
A spokesperson for BlockFi told Coindesk: “We have been in productive ongoing dialogue with regulators at the federal and state level. We do not comment on market rumours. 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.”
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