Kentucky joined list of states targeting BlockFi’s BTC savings accounts and it is the fifth state this month to question the potential securities violations of BlockFi as we reported a few days ago in our crypto news.
The interest isn’t the only thing that is compounding crypto lender Blcokfi as its regulatory troubles are compounding as well. The company ceased offering BlockFi Interest Accounts to the Kentuckyresidentds after receiving a cease and desist order on Friday from the Kentucky Department of Financial Institutions as per a tweet. Blockfi has been hit with a cease and desist order by New Jersey, Vermont, Texas, Kentucky, and Alabama. The order now reads:
“A recent DFI investigation found Blockfi is offering securities in the form of investment contracts in relation to the deposit of virtual currencies with the company. The firm, which is headquartered in New Jersey, has not registered these securities with the Kentucky DFI or the Securities and Exchange Commission, as required by law.”
The Kentucky DFI ordered the company to refrain from soliciting or selling any securities in Kentucky and the startup responded in a statement:
“BlockFi firmly believes that the BIA is lawful and appropriate for crypto market participants.”
An update on regulatory conversations: pic.twitter.com/0TYqSfBk4i
— BlockFi (@BlockFi) July 28, 2021
The BIA is asking for a savings account for crypto with much higher interest rates up to 7.5%. instead of stashing the dollars, the customers keep crypto like BTC or stable coins here and BlockFi lends it out. It has been a mainstay in the industry for a while now and has a $3 billion valuation with the company attracting the attention this month of the New Jersey Bureau of Securities that issued a deadline for September 2 for the company to stop offering the BIA to the New Jersey residents.
As reported recently, The attorney general in New Jersey filed a cease and desist order against the company in July demanding that the BlockFi Interest Account that promises 7.5% annual returns on deposited crypto stops by July 22. the rules are simple, if you sell securities in New Jersey you would have to comply with New Jersey’s securities laws as the AG Andrew J Bruck said at the time. This was the first in a series of actions by state securities regulators against the lender. Now, New Jersey extended the deadline but it is still handed in hand with Texas and Alabama when it comes to the decision.