BlockFi Will Pay $100M To Settle Investigation On High Yield Lending

Crypto lender BlockFi has been under investigation since November 2021 over a high-yield lending product, which offers yields as high as 9.5%.

According to a Bloomberg report, BlockFi Inc. will pay $100 million to settle allegations from the US Securities and Exchange Commission (SEC) and state regulators that it illegally offered a product that pays customers high interest rates to lend out their digital tokens, sources familiar with the matter said.

The company will pay the U.S. Securities and Exchange Commission (SEC) $50 million and stop opening new accounts of its high yield lending product to most Americans as part of a settlement of an ongoing investigation into whether the product is a securities offering.

According to the report, the settlement does not appear to affect existing accounts.

In addition, BlockFi will pay another $50 million to various state regulators. The BlockFi Interest Accounts have faced scrutiny from securities regulators in New Jersey, Texas, Kentucky, Alabama and Vermont over the offering. Several of these states planned or issued cease-and-desist orders as part of their investigations throughout 2021.

The crypto lending firm has been under investigation since November 2021 over the lending product, which offers yields as high as 9.5%.

BlockFi spokesperson commented on the matter:

“We have been in productive ongoing dialogue with regulators at the federal and state level. We do not comment on market rumors. 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.”

SEC has been looking into crypto lending in general in recent months, and is reportedly investigating Voyager Digital, Gemini Trust and fellow crypto lender Celsius Network.