Anonymous News | BlockFi settles for $100 million with regulators, ceases services to U.S. users, community exposes platform as high risk

Bloomberg reported, citing anonymous sources, that the cryptocurrency lending platform BlockFi will pay a $100 million fine to settle charges brought by the U.S. Securities and Exchange Commission (SEC) and various state regulators. This settlement also involves other lending platforms such as Gemini Trust and Celsius Network. As part of the settlement, BlockFi will no longer be able to offer services to U.S. customers.

BlockFi to Pay $100 Million Fine

BlockFi has become a target of regulatory scrutiny over the past year, facing accusations of violating securities laws by regulators in Alabama, New Jersey, and Texas, who deemed BlockFi's interest account BIA to fall within the securities category. The SEC also reportedly launched an investigation into BlockFi due to high interest rates.

According to sources cited by Bloomberg, BlockFi is set to pay a $50 million fine to the SEC and another $50 million to various states, with an official announcement expected next week, involving lending platforms such as Celsius Network and Gemini Trust.

As part of the settlement terms, BlockFi will no longer be able to open new accounts for U.S. users in the future. BlockFi spokesperson Madelyn McHugh stated:

BlockFi continues to engage in discussions with federal and state regulatory agencies. We do not comment on market rumors and assure users of the safety of their assets at BlockFi. Users will continue to earn interest on cryptocurrencies on the platform in the future.

The SEC has not commented on the matter.

Risks of Lending Platforms

While centralized platforms offer seemingly stable returns and lower risks compared to the frequent hacking incidents in the DeFi sector, seasoned DeFi trader DegenSpartan expressed his views on the recent events:

Honestly, I'm surprised BlockFi is still operational. I don't have money in there, you'd have to be insane to put money in BlockFi. I have money in Celsius, but I'm still not satisfied with them. They've shown they're a clown by losing money due to the Badger hack, and it seems like BlockFi is also bleeding investors' money to stop the bleeding.

Larry Cermak, Vice President of Research at The Block who had previously criticized Celsius several times and claimed it was close to collapse, remarked:

BlockFi might still have investor support, not sure if it's worse than Celsius, but if you look closely at their wallet movements, they're starting to get into some risky DeFi farming, uncollateralized loans, which is definitely not my cup of tea. BlockFi may have deep pockets, but there are certainly risks involved.