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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

#101

Post by sirspacey »

f0e4c2f7 wrote: post #48
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…

Crypto to me reads increasingly like classical finance as time goes by. The parallel here is that banks lobby against new regulation, then once the regulation exists as a moat, they lobby to keep the regulation. I'm sure the 100M fine didn't feel great but unless it bankrupts the company I doubt that BlockFi would want to go backwards now. For the low price of 100M they now have a map of how to legally do business in…

This:

“They now have a map”

Regulators won’t generally tell you how to comply with a rule, often because they don’t know.

So you force them to make a ruling and then have a proprietary roadmap.

What was learned in those meetings by both parties is a huge moat.

In the end, the SEC just got a hefty pay day for doing their job.

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

#102

Post by [deleted] »

Animats wrote: post #91
thebean11 wrote: post #87

Earlier quoted context omitted.

Is BlockFi a scam though? Fraud is not what they are getting fined for, and it sounds like they can continue to operate if they meet these reporting requirements, and that the company intends to do that.

They misrepresented how their assets were collateralized, creating a false impression of safety. That's fraud.

[deleted]

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

#103

Post by MisterBastahrd »

P1: Would you like to buy this banana?

P2: That's an apple.

P1: No, it's a banana.

P2: Dude, that's clearly an apple.

P1: Okay, it's an apple, but by pretending it's yellow and long, we're bypassing the rules for selling apples.

P2: That's not.... that's now how any of this works

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

#104

Post by z16a »

Animats wrote: post #74

Basically, the Investment Act of 1934 says: 1. You have to file a prospectus (an S-1) before collecting money. 2. You have to disclose a lot of stuff, like who's really behind this, where the money goes, what the risks are, what's happened so far, and what the business plan is. 3. Lying in an S-1 is a crime. Crypto schemes tend to violate 1), because 2) would show that their scheme is a scam, and if they tried to cov…

Please clearly articulate how Blockfi is a scheme or a scam.

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

#105

Post by coffeefirst »

vinniejames wrote: post #34
capableweb wrote: post #25

Earlier quoted context omitted.

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".

Quoted post unavailable.

I'm guessing you don't know a whole lot of people who work in government.

They do not value media attention. They're not politicians, and that's not how any of this works.

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

#106

Post by vishnugupta »

babyshake wrote: post #97
vishnugupta wrote: post #79

Earlier quoted context omitted.

You are right in general. As you could guess from the tone of my comment, I want the ecosystem to be cleaned up and my startup is going to play a role in that. It is essential for crypto/DeFi to go mainstream. There is a big shakeup coming which will weed out all these get-rich-quick products. Me and my co-founders are committing ourselves into this for the long haul (think ~10 years) so are taking it slow. We hope o…

Are you able to speak to how your startup plays a role in cleaning up the ecosystem? It seems like there are a bunch of different types of things that need cleanup, everything from the likes of BlockFi and lending products to outright scams that are trying to steal your wallet credentials or steal your funds. I'd welcome any type of cleanup

We are at idea-validation stage so it's very early days for us. The overarching theme is educating users by making them aware of what they are/have getting/gotten into. Somewhat similar to rating agency in the traditional finance world (e.g., Moody's) but not exactly like them.

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

#107

Post by arcticbull »

maerF0x0 wrote: post #39
duxup wrote: post #32

Earlier quoted context omitted.

Provided we're not talking about an economy crashing act. Fines probably should be lower than "can't absorb them". The prospect of the SEC crashing every rando company with fines isn't great. Lotta people hurt who had nothing to do with it. I worked at a company that pulled some illegal stuff with backdating stock awards and so on. CEO actually went to jail. I'm glad I still had a job and the company rolled on, our c…

I think by "absorb" the poster meant "Pay the fine and still make a profit from the fine inducing activity"

Thanks! Yes, that's exactly what I meant.

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

#108

Post by vineyardmike »

shawabawa3 wrote: post #92
PragmaticPulp wrote: post #69

Where is the $100 million going to come from? Do they have that much money to spare? Or are their customers about to take a haircut? On that topic, where does BlockFi's profit come from? They're offering 9% (previously 12%) interest on deposits. Are they really re-loaning that money to other people at the 20-30% interest rate required to produce those returns (high interest rates come with high default rates, so you…

They likely re-lend on crypto platforms where thanks to incentives and high borrow demand you can relatively easily get 15+% yields For example anchor protocol offers 20% APY on UST deposited in it, and has done consistently for 6+months. As long as the peg holds and the protocol is solvent it's "free" money

FYI. Anchor is almost out of money to pay that yield.

https://au.finance.yahoo.com/news/anchor-protocol-reserves-s...

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

#109

Post by ryanSrich »

Animats wrote: post #74

Basically, the Investment Act of 1934 says: 1. You have to file a prospectus (an S-1) before collecting money. 2. You have to disclose a lot of stuff, like who's really behind this, where the money goes, what the risks are, what's happened so far, and what the business plan is. 3. Lying in an S-1 is a crime. Crypto schemes tend to violate 1), because 2) would show that their scheme is a scam, and if they tried to cov…

Conflating anything related to crypto as a scam is just lazy and anti-intellectual. This is one of HN's weakest traits IMO. I find great value in following topics and threads on HN, but it's unrelenting hate for crypto and crypto adjacent topics is unfounded.
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