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.

BlockFi CEO Zac Prince responded to the states' action in a series of tweets in July. He said, "We remain firm in our belief that the BlockFi Interest Account is not a security.  We are fully operational for all of our existing clients in New Jersey and worldwide, who continue to have access to all products, services, and assets on the BlockFi platform."

He added, "We will continue to engage with all relevant authorities to protect our clients’ interests and expand accessibility to innovative financial solutions for all."

The SEC has been aggressive in cracking down on cryptocurrency firms. The federal securities regulator's most recent enforcement action was against American CryptoFed DAO LLC. 

Last week, the SEC halted the American CryptoFed from registering its Ducat and Locke digital tokens as equity securities. The Wyoming-based crypto firm filed a materially deficient and misleading registration form.

In September, the Commission issued a Wells Notice to Coinbase (NASDAQ: COIN) regarding its planned Lend product, which allows customers to earn interest on select cryptocurrencies on its platform. Coinbase decided to abandon its plan to launch the product following the SEC's warning.

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