Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Blockfi agrees to pay $100M in penalties and pursue registration

sec.gov

Post reply on HN
Print view View original

51–60 of 240 posts

Re: Blockfi agrees to pay $100M in penalties and pursue registration

#51

Post by smoe »

vinniejames wrote: post #10
capableweb wrote: post #9

Earlier 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…

Quoted post unavailable.

> 22. BlockFi made a material misrepresentation to BIA investors concerning the level of risk in its loan portfolio. Beginning at the time of the BIA launch on March 4, 2019 and continuing to August 31, 2021, BlockFi made a statement in multiple website posts that its institutional loans were “typically” over-collateralized, when in fact, most institutional loans were not. When BlockFi began offering the BIA investment, it intended to require over-collateralization on a majority of its loans to institutional investors, but it quickly became apparent that large institutional investors were frequently not willing to post large amounts of collateral to secure their loans. Approximately 24% of institutional crypto asset loans made in 2019 were overcollateralized; in 2020 approximately 16% were over-collateralized; and in 2021 (through June 30, 2021) approximately 17% were over-collateralized. As a result, BlockFi’s statement materially overstated the degree to which it secured protection from defaults by institutional borrowers through collateral. Through operational oversight, BlockFi’s personnel failed to take steps to update the website statement to accurately reflect the fact that most institutional loans were not over-collateralized

https://www.sec.gov/litigation/admin/2022/33-11029.pdf

Re: Blockfi agrees to pay $100M in penalties and pursue registration

#52

Post by lottin »

vinniejames wrote: post #6
capableweb wrote: post #3

Interesting 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…

Quoted post unavailable.

> Answer to all is, no, they didn't.

Exactly. The $100M fine was for double parking.

Re: Blockfi agrees to pay $100M in penalties and pursue registration

#53

Post by abritrum »

I (along with other) have been filing whistleblower reports on blatant price manipulation on an OTC stock for the entirety of last year (about 30 reports of naked short selling, wash trading). Not one peep from the SEC. It's been eye-opening to see the amount of fraud in the financial markets that goes unchecked. Sometimes I question my sanity that I persist in this stock and whether what I see is illegal. Good to see that they are going after bigger fish, letting the smaller ones go.

Re: Blockfi agrees to pay $100M in penalties and pursue registration

#55

Post by pavlov »

capableweb wrote: post #36
SilasX wrote: post #30

Earlier quoted context omitted.

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.

Agreed. The SEC claims it broke regulations by doing "unregistered offers and sales of the lending product", "operated for more than 18 months as an unregistered investment company" and "false and misleading statement for more than two years on its website concerning the level of risk", none of which would be exposed by a whistleblower but instead by just going to their website or having an account there. Nothing tha…

And if that's available just by going to a crypto company's website, imagine what kind of evidence an insider may have access to.

Re: Blockfi agrees to pay $100M in penalties and pursue registration

#56

Post by cuteboy19 »

capableweb wrote: post #11
pm90 wrote: post #5

Earlier quoted context omitted.

They won’t. The desire for making a quick buck is too strong. The avalanche of marketing around crypto is going to lead many gullible people to “invest” in crypto and lose their money. Unless regulators shut them down or expose them quite clearly as mlm/ frauds I suspect this isn’t going to stop.

> Unless regulators shut them down or expose them quite clearly as mlm/ frauds I suspect this isn’t going to stop. It seems, based on this action that the SEC just went through with, that things like BlockFi are not "clearly MLM / fraud" as you say, as otherwise they would indeed try to get them shutdown, not just slap a tiny fine on them.

The SEC doesn't do MLMs. Herbalife and Lularoe operate in broad daylight. The US has always been very kind to such scams

Re: Blockfi agrees to pay $100M in penalties and pursue registration

#58

Post by jdrc »

pavlov wrote: post #4

The 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.

Does the program also work for bigtech employees?

Re: Blockfi agrees to pay $100M in penalties and pursue registration

#59

Post by Animats »

matthewdgreen wrote: post #47
vinniejames wrote: post #6

Earlier quoted context omitted.

Quoted post unavailable.

>Did they fail to make interest payments as promised? Did they advertise an interest rate the they didn't fulfill? You could say more or less the same thing about Bernie Madoff's fund, at least right up until the end. I'm not saying that BlockFi is doing anything wrong here, but simply having good results for a while in a bull market doesn't make everything magically ok.

Exactly. Ponzi schemes deliver high interest rates, paid for by later investors. Until they don't, because the invested capital is gone.

There's are too many of those in the crypto space.

Re: Blockfi agrees to pay $100M in penalties and pursue registration

#60

Post by Cederfjard »

SilasX wrote: post #30
pavlov wrote: post #4

The 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.

I think it was pretty easy to follow the reasoning.

Cryptocurrency companies seem too often play fast and loose with laws and regulations, and the SEC can and will fine them. In addition, whistleblowers can get handsomely rewarded. Ergo, it might soon start to look more and more attractive for a lot of employees to tell on their employers.

Even if this particular case didn't go down like that, I still think it's an interesting point that's relevant to the discussion.

Post reply on HN