BlockFi Has To Pay Penalty And Stop Opening High-Yield BTC Accounts

BlockFi has to pay $100 million in penalties which will be one of the biggest SEC settlements ever paid by a crypto company and it also has to top opening high-yield BTC accounts so let’s read further in our latest cryptocurrency news.

BlockFi has to pay $100 million to settle the investigations from the US SEC and multiple other state securities regulators. According to reports, BlockFi will also discontinue new high-yield accounts for most of the US residents. A spokesperson from the crypto company Madelyn McHugh said she will not comment on the market rumors but she did add:

“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.”

BlockFi’s business model is offering customers high-interest rates for locking up crypto like BTC, Tether, and Ethereum into savings accounts. The company loans those funds out at a higher rate but the SEC alleged that these BlockFi Interest Accounts that can deliver yields of up to 5-10% are unregistered securities. The SEC’s attention came after a group of state securities regulators from New Jersey, Texas, Vermont and Alabama issued show-cause or cease and desist orders demanding that BlockFi cease offering the products to their residents.
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Other crypto lenders are facing scrutiny from state and federal regulators and among them is Celsius. Coinbase also shuttered its planned high-yield Lend product after the SEC threatened to sue and the $100 million settlement if accurate will be one of the biggest crypto enforcement actions. In 2019, the SEC fined Block.one $24 million for its role in staging the EOS initial coin offering which is a small price to pay compared to the $4.2 billion raised. In 2020, Telegram also paid a whopping $18.5 million and refunded the investors $1.2 billion over its aborted TON token launch.
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As recently reported, BlockFi creates new fee structure as the crypto lending firm that battles plenty of securities regulators over its high-interest savings accounts announced that it will no longer offer free withdrawals of ETH because of the increasing transaction costs on the ETH network. The announcement applies to all tokens that run atop the ETH network like Pax gold, Uniswap, Chainlink, and the Basic Attention Token.