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Blockfi agrees to pay $100M in penalties and pursue registration
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Re: Blockfi agrees to pay $100M in penalties and pursue registration
#22Quoted post unavailable.
Looks like they broke the law.
Re: Blockfi agrees to pay $100M in penalties and pursue registration
#23Quoted post unavailable.
Your question is answered by literally the first sentence of the article.
In the US, it's illegal to sell securities without registering with the SEC.
Re: Blockfi agrees to pay $100M in penalties and pursue registration
#24Quoted post unavailable.
The order finds that BIAs are securities under applicable law, and the company therefore was required to register its offers and sales of BIAs but failed to do so or to qualify for an exemption from SEC registration. Additionally, the order finds that BlockFi operated for more than 18 months as an unregistered investment company because it issued securities and also held more than 40 percent of its total assets, excluding cash, in investment securities, including loans of crypto assets to institutional borrowers.
Re: Blockfi agrees to pay $100M in penalties and pursue registration
#25Earlier quoted context omitted.
Here is the full quote from the SEC statement (in case you missed it when you read the statement): > The order also finds that BlockFi made a false and misleading statement for more than two years on its website concerning the level of risk in its loan portfolio and lending activity. > Without admitting or denying the SEC’s findings, BlockFi agreed to a cease-and-desist order prohibiting it from violating the registr…
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I'm not 100% sure, as I don't work for the SEC and don't have any special insights into this case.
But I'll make a guess and say that they probably downplayed the risks in one way or another on their website, compared to statements made to the SEC. Let's say they say "It's risk-free!" on their website while in a statement to the SEC they say "There is a small risk customer lose their funds if X happens".
Re: Blockfi agrees to pay $100M in penalties and pursue registration
#26...and at the end of the day DeFi will be so regulated it will have all the bad parts of DeFi and regular finance.
Nothing decentralized about BlockFi.
Re: Blockfi agrees to pay $100M in penalties and pursue registration
#27...and at the end of the day DeFi will be so regulated it will have all the bad parts of DeFi and regular finance.
Regulations are the good parts of regular finance. There are no financial regulations that currently harm me, a consumer.
We honestly need to return to a time when we had a bit more financial regulation.
Re: Blockfi agrees to pay $100M in penalties and pursue registration
#28Good for the SEC and for BlockFi for keeping these kinds of things in the public purview. I hate how the FDA has so little teeth, comparatively. Eg: https://peckford42.wordpress.com/2021/10/05/pfizer-covering-...
It's just too bad that the SEC's fines are small enough that companies can absorb them. Feels more like they're getting their beaks wet. They need to impose significantly higher penalties and even dissolve the business if appropriate.
Re: Blockfi agrees to pay $100M in penalties and pursue registration
#29Interesting to read BlockFi's own statement about the event: https://blockfi.com/regulatory-developments/ No mention of the fine at all, and instead framed as "first SEC registered crypto interest-bearing security" (from BlockFi's page) rather than "[BlockFi] failing to register the offers and sales of its retail crypto lending product" and "the SEC also charged BlockFi with violating the registration provisions of t…
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Shkrelli made all his 'victims' whole too, and still ended up in prison. The law takes a dim view of the whole 'ends justifying the means' thing.
Re: Blockfi agrees to pay $100M in penalties and pursue registration
#30The SEC has a whistleblower program that can award up to 30% of the fine to a whistleblower. Here's an example of someone receiving $32 million: https://www.sec.gov/news/press-release/2021-211 If crypto prices go down, it might become more lucrative for crypto employees to start talking to SEC rather than trying to sell their tokens. If you work at one of these places, why not start collecting documentation now.
Not sure the relevance, or how this story would remind you of that program, since BlockFi doesn’t issue a token, nor was the product in question secret.
Disclosure: used BlockFi’s lending program and had pulled out most of my holdings for unrelated reasons by last week.