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BlockFi reached an agreement earlier this year for a $100 million penalty. The Iowa Insurance Division was fined almost $1 million. Celsius isn’t the only decentralized financing ( DeFi), lending platform that has had a bad Week; yesterday BlockFi was ordered to pay a 943,396.22 penalty by the state of Iowa’s Insurance Division Fines for unregistered securities.

BlockFi agreed to pay $100million to the United States Securities and Exchange Commission and 53 other jurisdictions as part of a larger multi-state investigation.

BlockFi was previously ordered by regulators to pay $50 million to SEC, and $50 million each to each jurisdiction.

Iowa Insurance Commissioner Doug Ommen stated in a statement that while innovations like cryptocurrency may allow for growth and evolution in financial systems, regulators must ensure that this happens within a framework that protects investors and allows for responsible capital formation.

Further, the statement claims that BlockFi misrepresented institutional loans as being over-collateralized by “multiple website postings.” According to IID, less then a quarter have been over-collateralized between 2019 and 2021. BlockFi is thus accused of selling securities which were not secured.

BlockFi in hot water
BlockFi offers high interest rates to customers for locking up cryptocurrencies such as Bitcoin or Ethereum into savings accounts. These funds are then loaned out by the company at higher rates. The SEC claimed in November, however, that these BlockFi interest accounts, which yields between 5-10%, were not registered securities.

After a quintet, consisting of state securities regulators from Alabama, Kentucky New Jersey, Texas, Vermont, and Texas, issued show-cause or cease & desist orders requesting that BlockFi stop offering products to their residents, the regulatory scrutiny was initiated.

BlockFi agreed to cease offering high-yield accounts for new U.S. customers in addition to the $100m penalty back February, according to .

BlockFi announced Monday that it would reduce its staff ” by approximately 20% due to “a dramatic shift of macroeconomic conditions globally.”

The post BlockFi Fined $1 Million for Selling Unregistered Securities first appeared on The Daily Encrypt.



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Angie Byrd