The state of Iowa has ordered BlockFi Lending LLC to pay fines and stop making false statements about the securities it offers.
Cryptocurrency lender BlockFi is in hot water with state regulators in Iowa for making false claims about the collateral status of loans provided to it.
The Securities and Regulated Industries Bureau of the Iowa Insurance Division presided over the matter under Iowa Code 502.604, the Uniform Securities Act, which mandates the body to “prohibit and prevent a person from engaging in an “act, practice” of issuing an order.” provides power. or the course of business” in contravention of Chapter 502 of the Equal Securities Act.
Iowa Insurance Commission Doug Oommen said, “While innovation, such as cryptocurrencies, can provide for growth and development in the financial system, it is important that regulators ensure this happens within an appropriate framework that protects investors.” while still facilitating capital formation.” Consent order for the firm.
BlockFi has been ordered to pay an administrative fine of $943,000 to the state of Iowa, in addition to a settlement of $50 million split equally between 50 US states and 53 jurisdictions including the District of Columbia, Puerto Rico and the US Virgin Islands. In five installments of approximately $188,000.
BlockFi tackles music
The order is the culmination of a joint 53-state investigation by the North American Securities Administrators Association into BlockFi’s lending activities. The state of New Jersey, one of the association’s members, filed a cease-and-desist order on July 19, 2021, alleging that BlockFi, its holding company BlockFi Inc., and its affiliate BlockFi Trading LLC tax unregistered securities offerings and sales. has been
The states of Alabama and Vermont later filed an order to show cause, accusing BlockFi, its affiliates and holding company of pushing unregistered securities on residents.
BlockFi claimed on its website that its loans “generally” had more collateral (collateral borrowed more than the posted amount) without providing proof. Upon investigation, Iowa regulators found that only 17% of loans granted in 2021, 16% in 2020 and 24% in 2019 were overcollateralised. The state watchdog alleges that investors were thus misled to assume more security than was available.
“Iowans should make sure that they are only investing what they should be prepared to lose,” concluded Oommen.
In settlement, the Company neither accepts nor denies the conclusions drawn in the consent order. BlockFi recently paid $100 million to the Securities and Exchange Commission for an unregistered securities offering.
Other major crypto companies seek regulatory clarity on products of interest
In April 2022, Be[In]Crypto reported that major crypto companies Kraken, Bitstamp and Circle were keen to offer interest-bearing products and did not want to go down the same route as BlockFi and Celsius, but were seeking regulatory clarity.
“Some crypto players in the US have gotten into big trouble with how they handle lending and credit-type offerings. We don’t want to go there, so we are going to be very diligent,” said Bobby Zagotta, CEO of Bitstamp USA said at that time.
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