SEC Cracks Down on Cryptocurrency
BlockFi, a cryptocurrency startup, agreed to a $100 million settlement over allegations from the SEC and state regulators that it illegally offered a product violating securities law.
The settlement marks the largest-ever penalty against a cryptocurrency firm and the first in which a crypto company was charged with violating the registration provisions of the Investment Company Act of 1940.
In March 2019, BlockFi started offering so-called interest accounts to the public, in which investors lent the company crypto assets in exchange for its promise to provide a variable monthly interest payment.
BlockFi then pooled investor assets and exercised full control over how much to hold, lend, and invest.
The SEC alleged BlockFi had misled investors about the level of risk they were taking on by lending out their crypto assets and that they didn’t have the information they needed to make appropriate investment decisions.
Without admitting to or denying the SEC’s findings, BlockFi agreed to cease offering or selling its unregistered interest accounts in the United States.
The announcement comes on the heels of Sunday night’s Super Bowl, which has been dubbed the Crypto Bowl due to a large number of crypto advertisements during the game.