BlockFi Faces Fine For Failing To Register As Securities Platform
BlockFi faces fine for failing to register as a securities platform, according to the Iowa Insurance Division Fines which ordered it to pay about $1 million in fines so let’s read more today in our latest cryptocurrency news.
BlockFi is far from having a peaceful season as the entire crypto industry is suffering the hits of the bear marekt and now the lending platform is also facing a $1 million fine imposed by the Iowa State as part of the $100 million settlement with the SEC and other US jurisdictions. The Iowa Insurance Division Fines ordered BLockFi to pay an administrative fine of $943,000 for failing to register as a securities trading platform.
According to the statement issued by Doug Ommen, the Insurance Commissioner, BlockFi faces a fine worth $943,000 for offering securities in the state of Iowa without proper registration and regulatory approval. In addition to that, they ordered the platform to cease operations right away. According to Ommen, the regulators have to protect residents from investmetns that don’t have an appropriate framework to guarantee responsible investments and that is why he calls on the people in the state to corroborate the legality of any type of investment platform with the IID before making a final decision:
“While innovations, like cryptocurrencies, may provide for growth and evolution in the financial system, it is important that regulators ensure this occurs within an appropriate framework that protects investors while still facilitating responsible capital formation.”
The order came after a multi-state investigation that involved the SEC and other state security regulators from 53 jurisdictions. The regulators determined that BlockFi has to pay settlements of up to $50 million to every jurisdiction in addition to the $50M to the SEC. A few days ago, BLockFi announced the layoff of 20% of its workforce because of the dramatic shift in macroeconomic conditions across the world.
The Iowa Insurance Division Fines argued that BlockFi lied to its customers and the lending platform claimed the institutional loans were over collateralized typically according to the regulators’ investigations but they were not. According to the Iowa Insurance Commissioner, the situation led the people in the state to invest their money in a platform that offers speculative investments without providing more information to its clients.
BlockFi’s valuation dropped from over $5 billion in early 2021 to $1 billion. This reflects the company’s issues facing tightly coordinated scrutiny from the regulators. The company hasn’t yet made an official statement on the new payment order but a huge figure could affect its stability.