BlockFi is reportedly under investigation by the U.S. Securities and Exchange Commission (SEC) over its high-yield, interest-bearing cryptocurrency accounts.
On its website, the New Jersey-based cryptocurrency lending platform states that investors can earn up to 9.5% annual percentage yield (APY) with a BlockFi Interest Accounts (BIA). It also states that the interest accrues daily and is paid monthly. There are no hidden fees, no minimum balances, and no reason to wait.
Bloomberg first reported the SEC scrutiny on Wednesday. The media outlet’s sources said the Commission is focused on determining whether BlockFi’s accounts are similar to equity securities, which must be registered with the regulator under the Securities and Exchange Act.
In July, several states including Alabama, Kentucky, New Jersey, Texas, and Vermont issued cease and desist orders against BlockFi to stop offering unregistered securities in the form of interest-bearing cryptocurrency accounts.
In their cease and desist orders, the states noted that BlockFi raised nearly $15 billion from investors. The cryptocurrency lending platform violated securities laws by failing to register its interest-bearing accounts as securities. It also failed to disclose to investors that its BIA is not registered with any securities regulator including the SEC or exempted from registration.
