BlockFi got served with a cease and desist order in New Jersey and now the company has to stop offering services to new customers as we can see more in our latest cryptocurrency news.
In the latest blow of one of the biggest names in the industry, the New Jersey AG Accused BlockFi of violating the securities laws. However, the alleged securities law violations are still unclear. The attorney general of New Jersey issued a cease and desist order for BlockFi to stop accepting new customers as the CEO Zac Prince tweeted. The news is a huge blow to the company which is one of the most prominent companies in the crypto space, known for offering yields up to 8% to those that are willing to lend crypto. Prince said that the company will be able to continue to serve existing customers in other jurisdictions:
“The order calls for BlockFi to stop accepting new [BlockFi Interest Account] clients residing in New Jersey beginning July 22, 2021.”
Forbes was first to report on the cease-and-desist order after obtaining a draft press release from the AG’s office. The publication cited a comment by Acting Attorney General Andrew J Bruck which suggests that BlockFi violated the securities laws. Bruck commented:
“Our rules are simple: if you sell securities in New Jersey, you need to comply with New Jersey’s securities laws. No one gets a free pass simply because they’re operating in the fast-evolving cryptocurrency market. Our Bureau of Securities will be monitoring this issue closely as we work to protect investors.”
It remains to be seen whether the entire operation of BLockFi was a violation of securities laws or whether it jas issues with certain transactions given that federal regulators declared BTC and ETH not securities, the state could have targeted the company over the loan products that were tied to assets like Uniswap and Chainlink. In any case, BlockFi is in serious trouble with regulators and the question remains whether the federal regulators especially in New York will take legal action against the company.
BlockFi was a favorite among crypto investors having raised $450 million to date and achieved a $3 billion valuation. It did have some issues over the years especially in May when It went awry sending out rewards denominated in BTC, not dollars which resulted in huge liabilities. All of this raised questions about whether the platform is safe for the consumers. In the meantime, the news of the investigation seemed to have triggered a drop in Bitcoin’s price.