SEC Ratchets Up Crypto Crackdown
Monday February 14, 2022. 06:32 PM , from Slashdot
Crypto startup BlockFi agreed to pay $100 million to settle allegations from the SEC and state regulators that it illegally offered a product violating securities law. From a report: This is the largest-ever penalty against a cryptocurrency firm and the first in which a crypto company was charged with violating the registration provisions of the Investment Company Act of 1940. Through its action, the SEC is setting a precedent with regard to its handling of crypto lending accounts, clarifying that it views these types of offerings as securities and will regulate them as such. Beginning in March 2019, BlockFi began offering so-called interest accounts to the public, in which investors lent the company crypto assets in exchange for its promise to provide a variable monthly interest payment. BlockFi then pooled investor assets and exercised full control over how much to hold, lend and invest.
Details: According to the SEC, BlockFi misled investors about the level of risk they were taking on by lending out their crypto assets, and that they didn't have the information they needed to make appropriate investment decisions.
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