BlockFi, a crypto firm, reaches a $100 million settlement for failing to register loan products.

The Securities and Exchange Commission has reached a 100 million settlement with blockchain financing on registration failures, while regulators warned last fall that it would take action against cryptocurrency firms offering loan products for registering themselves as investments or registering them as securities. Have. Companies

“Today’s settlement makes it clear that crypto markets must comply with time-tested securities laws, such as the Securities Act of 1933 and the Investment Companies Act of 1940,” SEC Chairman Gary Gansler said in a statement Monday.

Since March 2019, New Jersey-based BlockFi has been offering customers the opportunity to lend the company digital assets and earn interest on those loans, the commission said. Regulators said the program was essentially an investment agreement, in which customers lent their money with the promise that they would be paid more at a later time. BlockFi should register them as securities and register itself as an investment company, the SEC found.

When the settlement was the first of its kind, the threat of an SEC investigation had already thwarted plans to launch a similar loan product by Coinbase, the largest U.S.-based cryptocurrency exchange. Coinbase executives argued that its new product should not be considered a security measure, but they canceled their plans for an interest-generating land product in September.

BlockFi’s chief executive, Zack Prince, said the settlement was a step forward.

Mr. Prince said in a statement.

BlockFi was preparing to offer a new version of its loan product called BlockFi Yield, which will comply with SEC rules, Mr. Said the Prince.

“We intend to become a new, SEC-registered, crypto interest-holder security for BlockFi Yield, which will allow customers to earn interest on their crypto assets,” he said.

The company said that existing customers of its current loan product, BlockFi Interest Accounts, will be able to continue their outstanding loans and earn interest as usual, but they will not be able to increase their status. The company also said it would stop offering the product to new US customers. BlockFi has 60 days to meet the SEC registration requirements.

Half of the $ 100 million settlement will go to the SEC, while the other half will go to the 32 states where regulators brought similar charges against blockchain, the commission said.

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