Why did the SEC impose a fine of $100 million on this crypto lending platform

• United States Security and Exchange Commission is an independent agency that works for enforcing the law against market manipulation
• This time the SEC slapped a well known crypto lending platform, BlockFi, with a fine
• The Law enforcement agency has alleged BlockFi of constituting unregistered securities and puts a huge fine amount of $100 million

BlockFi slapped by SEC to pay $100 million

The US SEC has managed to picture itself as a law enforcing agency strict enough that any firm, no matter how famous it is or how much bigger it is, comes under its jurisdiction anytime it makes mistakes. In January, SEC Chair Gery Gensler stated that crypto trading and exchange firms would face strict scrutiny. 

One of the leading crypto lending platforms, BlockFi, seems to come under the agency’s radar this time. The SEC slaps the firm with a $100 million fine. The amount consists of two different fines, $50 million each. 

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BlockFi has to pay $50 million for violating the law by providing unregistered securities and another $50 million the firm will pay to five states investigating it.

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Allegations of SEC on BlockFi

As per Security and exchange commission put, several high interests yielding accounts of BlockFi comprise unregistered securities. On top of that, the investigating states’ Security Regulators of states like New Jersey, Kentucky, Alabama, Texas, and Vermont have also raised questions of the platform’s interest accounts. 

The imposed fine amount is one of the biggest against any firm to date. BlockFi made a statement for investors to reassure them that the discussion between the SEC and state regulators is still going on. 

BlockFi

With the rise in popularity of crypto and finance services, crypto lending platforms have also emerged and gained enough acceptance. They attracted most users with huge holdings in their accounts to pool their capital assets in lending pools and gained handsome interest over it. 

BlockFi also has the same business model that offers high interest rates to customers in exchange for their storing cryptocurrencies like Bitcoin, Ethereum, or tether, etc. 

Gemini Trust and Celsius Network are two firms with high yielding interest rates and are popular among retail investors. But BlockFi remains in preference because of its highest yielding rates, which sometimes go up to 10%. 

SEC took some strict actions recently on crypto firms

The commission has consistently taken actions against crypto and crypto firms whenever it finds anything fishy. Because of domination, most firms surrendered against it and accepted its conditions. 

For instance, the US’ largest crypto exchange lending platform, Coinbase Global Inc., had been put on hold when SEC warned the firm that it would be filed with charges if it worked until the next decisions. Although not all the players meant to surrender, some gave a pushback. 

Taking the lawsuit filed by US SEC on Ripple (XRP) has been the most talked-about issue since 2020. The law enforcing agency put allegations on the Ripple network for trading assets without registration with the SEC, which was denied and challenged by the network.