BlockFi the crypto lending platform has been in hot water since November 2021 from the SEC (Securities and Exchange Commission) over claims that the company was a securities offering.
Due to the wild west of cryptocurrencies, it’s easy for crypto companies to try and outrun the SEC by using cool buzzwords and slapping a new face over a familiar one. It seems BlockFi couldn’t outrun the SEC in this one, not even for a couple of “blocks” more.
They will now be giving the SEC $50 million and is ordered to pay another $50 million to state regulators who were strictly against their “exotic” financial offerings.
One of the main lures behind BlockFi is their promise of a 5 – 10% yield if you were to lock up your cryptocurrencies such as Bitcoin and Ethereum in their platform. They would then lend that money out to various individuals.
The SEC quickly noticed that this was nothing more than an unregistered security offering under the mask of cryptocurrencies and quickly went after them. Various states such as Alabama, New Jersey, Texas, and Vermont came out and told BlockFi to stop offering their products to their residents.
Writer’s Take:
It’s now a battle between old and new systems at this point within the crypto-sphere. Various companies have tried to offer yielding programs but it was quickly shut down by the SEC.
Coinbase attempted to launch a similar program for its clients but that was quickly swept under the rug as the regulators are not backing down. You still have companies who are within this space and participating but they are too small for the SEC to notice or even care about.
