BlockFi was fined $943,000 and must pay a $100 million settlement for failing to register securities in Iowa.
The Iowa Department of Insurance has fined $ 943,000 for trading and lending cryptocurrency platform BlockFi.The order was issued as a result of an investigation by the U.S. Securities and Exchange Commission (SEC) and securities regulators from 53 jurisdictions that are members of the North American Securities Administrators Association (NASAA). BlockFi will pay $ 50 million to the SEC and $ 50 million to 53 processing jurisdictions, according to a press release. The company is ordered to refrain from publishing false securities statements.
The investigation found that BlockFi issued and sold unregistered securities and misrepresented the level of risk in its loan portfolio. In various posts on its website, BlockFi claimed that its corporate loans were “typically” heavily secured, which was untrue, according to the press release. Ommen said that “Regardless of an investor’s knowledge or interest in cryptocurrencies, they need reliable information to make judgments. “With the introduction and increased acceptance of cryptocurrencies, Iowans are seeing new developments in the investing sector; nonetheless, speculative investments such as these should be handled precisely as such – as speculative. Iowans need to be careful to only invest money they are willing to lose. According to the study, only 24% of Cryptocurrency loans from BlockFi companies in 2019, 16% of loans in 2020, and 17% in the first half of 2021 were highly secured. As such, BlockFi’s statement on over-guaranteed loans “suggests to investors that BlockFi has greater protection against default than it actually has,” the press release said. As of December 31, 2021, BlockFi held about $ 14.6 million in Iowa residents, more than $ 267,000 at the end of 2019, according to a press release.BlockFi did not respond to requests for comment at the time of publication.