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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

#111

Post by managerclass »

ProjectArcturis wrote: post #75
jonathan-adly wrote: post #72

1. This is a PR win for the SEC. It can now go to congress and say, see, we are working with Crypto companies! (while they really aren't, not in good faith anyway). 2. This is a win for Blockfi. Like other mentions, they gave their business a legal veneer for the sum for $100m. If you are of the opinion that all Cryptos and related companies are scams. Guess what? The SEC disagrees. 3. The same product (even better a…

Definitely not a win for BlockFi. Definitely not an endorsement of crypto by the SEC. As part of the settlement, BlockFi had to agree to stop doing all that illegal stuff. "To settle the SEC’s charges, BlockFi agreed to pay a $50 million penalty, cease its unregistered offers and sales of the lending product, BlockFi Interest Accounts (BIAs), and attempt to bring its business within the provisions of the Investment C…

> BlockFi had to agree to stop doing all that illegal stuff

Have they though?

From Blockfi:

"As part of the resolution, existing U.S. BlockFi Interest Account (BIA) clients will maintain their accounts and receive interest as they always have, but cannot add new assets to their accounts as of today, February 14, 2022. Further, U.S. persons will not be able to open new BIAs. Following completion of the SEC registration process for BlockFi Yield, BIAs of U.S. clients will be exchanged for BlockFi Yield, unless a client instructs BlockFi otherwise. BIAs of BlockFi clients outside of the U.S. are not subject to today’s resolution."

Sounds like existing accounts can continue to function and accrue interest but no addition new users or assets can be deposited until they get SEC approval.

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

#112

Post by babyshake »

vishnugupta wrote: post #106
babyshake wrote: post #97

Earlier quoted context omitted.

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.

One related thing is that there has been a large increase in attempts by scammers to mimic a legitimate product with a fake domain, etc. You could actually detect these pretty well by looking at the TVL and other factors. Was the contract deployed fewer than 30 days ago? Have the amount of funds deposited to it less than the top 50/100 contracts?

A related problem is not even depositing but simply granting token approval to a scam app, and similar techniques may be used to warn users before they give these approvals.

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

#113

Post by rdbell »

smt88 wrote: post #27
300bps wrote: post #20

...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.

> There are no financial regulations that currently harm me, a consumer.

Mostly true if your main financial transactions are receiving bank deposits from your work & paying bills, and if you, your family and your friends all live in first-world countries.

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

#114

Post by consumer451 »

mint2 wrote: post #93
dna_polymerase wrote: post #65

HSBC got fined $84M for laundering mexican drug cartel money. The proportions don't add up. https://www.complianceweek.com/regulatory-enforcement/hsbc-h...

Yeah hsbc should have been fined more.

Shouldn't the director(s) be held responsible at all? It seems like if people escape consequences this behavior will continue.

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

#115

Post by Comevius »

yrral wrote: post #88

Here is SEC commissioner Hester Peirce's dissenting opinion: https://www.sec.gov/news/statement/peirce-blockfi-20220214 Essentially she says that while they did misrepresent the over collateralization, a 100m fine is too much since they did fulfill their end of the loans. Additionally, she says that the categorization this stuff as securities is not effective. US consumers want interest on their crypto-assets now, bu…

She always gives a partisan, anti-regulation opinion in these. She says that cryptocurrencies need new rules, but she never elaborates. She wants to keep the barrier of entry low while having meaningful protection for customers. Without regulation or oversight. How? Nobody knows. She doesn't either.

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

#116

Post by smt88 »

rdbell wrote: post #113
smt88 wrote: post #27

Earlier quoted context omitted.

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.

> There are no financial regulations that currently harm me, a consumer. Mostly true if your main financial transactions are receiving bank deposits from your work & paying bills, and if you, your family and your friends all live in first-world countries.

> Mostly true if your main financial transactions are receiving bank deposits from your work & paying bills

I also own (and occasionally trade) securities, have loans (mortgage and auto), use credit cards, and own equity in private companies.

The only financial thing that I don't do is sell financial services, which is the industry that regulations were designed to reign in because they tend to be filled with grifters.

But you're correct, I am in the US.

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

#117

Post by altairprime »

cuteboy19 wrote: post #94
nikanj wrote: post #85

Earlier quoted context omitted.

Luckily they can run the whole scheme from Elbonia, and people are more than happy to send over cryptos from the US.

That's almost exactly how Tether (USDT) works. Except instead of Elbonia we have the Caymans

Note that Tether moving to the Caymans inspired the UK finregs to investigate the UK accounting company that’s now running Tether’s books, so I wouldn’t consider the Caymans to be a successful escape yet: https://www.ft.com/content/e86f8d72-918c-4a80-a4bf-de3110316...

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

#118

Post by jgalt212 »

ryanSrich wrote: post #109
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.

In general I agree, but there's just so much damn smoke.

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

#119

Post by Tarsul »

ryanSrich wrote: post #109
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.

you're right but what I find even more jarring in crypto-threads is that usually the only argument (or at least the most prolific one) from the pro-crypto side is that the argument of the anti-crypto side is off-based. But that is not an argument pro-crypto that's at most an argument that's crypto-neutral. But maybe that's enough for the pro-crypto crowd because neutrality means that the show goes on. Nevertheless, it's seldom good enough for great discussions.

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

#120

Post by smoovb »

wmf wrote: post #61

Some people have a "lightning doesn't strike twice" theory about the SEC where getting busted once means you can do the same thing 10x more in the future and won't be busted again. So a $100M fine today unlocks billions in "legitimate" profit tomorrow.

Why would a business pay the this large fine, unless it lead to their continued existence and profitability. In this case the word 'fine' is better thought of as 'registration fee'. Being forced to stop their current product (BIAs) and relaunch the new Yield product seems to indicate the new product has the SEC's blessing.
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