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BlockFI ordered to stop onboarding New Jersey-based customers

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The New Jersey attorney general has issued an order against cryptocurrency lending service BlockFi to stop providing services to new clients in the state, effective July 22, 2021.

BlockFi CEO Zac Prince confirmed that the company received an order from the New Jersey attorney general to suspend interest-bearing transactions in the state for new clients. Prince said BlockFi remains “fully operational” for its current clients in New Jersey.

Is BlockFi breaking securities laws?

According to the report, the platform operates with various assets, including selling unregistered securities. This is in direct violation of relevant securities laws.

The BlockFi platform is popular with users. Because it offers higher returns when compared to similar platforms operating in the traditional economy. So, interest rate returns are higher, which attracts investors.

This did not go unnoticed by the authorities. So, the New Jersey Attorney General’s Office is about to issue an order banning the platform from offering interest-bearing accounts to customers.

This order will be the first of its kind bureaucratic act against the sites operating in the field of cryptolending. Since opening in 2017, the platform has already attracted half a billion dollars in investment. BlockFi’s total capitalization is $ 5 billion.

Acting Attorney General Andrew J. Brooke points out that the rules should be uniform in the state for each company. If a company involved in the sale of securities, then it will fully comply with state law in this area. No one has special rights, so the SEC will continue to carefully monitor how investors’ rights are secured.

It is clear that such actions of the authorities do not cause much enthusiasm among the representatives of the platform. Prince disagrees with the charge. He argues that BlockFi’s savings accounts do not use securities-based schemes. However, the platform is forced to obey them if they do not want to be subject to penalties.

Regulators restrict the activities of cryptocurrency exchanges

Starting today, the platform, according to an order from the Bureau of the Securities, will stop accepting applications from new clients who live in New Jersey. Thus, BlockFi complied with the requirements of the regulator. It is quite possible that this practice will continue for platforms operating in other US states.

Such actions of the authorities fit into the general practice used by regulators in many countries, not just in the United States. So, apparently, they intend to limit as strictly as possible the activities of exchanges and platforms working in the field of cryptocurrencies, controlling all their account transactions.

The pressure on the company intensified a couple of weeks after the service began preparations for issuing bank cards. It was reported that the cards will receive support for a reward program with payments in Bitcoin.

The first to receive plastic will be the Americans, who have previously entered the waiting list. With the help of a cryptocurrency card, users, among other things, will be able to receive bonuses for traders (up to 0.25% in BTC of the trading volume).

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