BlockFi to Pay $100m Penalty in SEC Settlement
In recent months, the crypto market has struggled, with Bitcoin (BTC) tumbling by more than 50% from its November ATH before finding support in the last few weeks. Increased regulatory scrutiny, sentiment towards FED monetary policy, and geopolitics have weighed in investor sentiment.
SEC Scrutiny of Cryptos on the Rise
For Ripple and XRP, it has been a more promising start to the year, however. News updates on the SEC v Ripple case have delivered strong support, with XRP revisiting $0.91 levels before the latest reversal.
Beyond Ripple, the SEC has targeted other names including Poloniex, Blockchain Credit Partners, and BitConnect, which shut down in 2018. Even Coinbase (COIN) came under SEC fire in 2021 over plans to launch a digital asset lending program.
In early January, SEC Chairman Gary Gensler announced that crypto exchanges will face more SEC scrutiny.
With the SEC v Ripple case ongoing and gathering momentum, some big wins for the SEC could test recent investor optimism over the SEC v Ripple outcome. Hopes of a favorable settlement have been key to XRP’s current year gain. Year-to-date XRP was up 5.63% to Tuesday 8th February. By contrast, Bitcoin (BTC) was down by 4.58% over the same period.
BlockFi Settles with SEC
While the SEC case against Ripple has been ongoing since 2020, BlockFi came under the SEC microscope back in November of last year. The SEC alleged that BlockFi’s high yielding accounts are unregistered securities.
Earlier in the year, the states of Alabama, Kentucky, New Jersey, and Vermont had reportedly issued show-cause or cease-and-desist orders calling on the platform to stop offering its products to state residents. It was likely that the orders from the 5 states brought BlockFi into the sights of the SEC.
Going into the weekend, Bloomberg reported that BlockFi has agreed to pay a $100m penalty. The settlement would be amongst the largest paid by a crypto company. New Jersey-based BlockFi will also have to cease offering high-yield accounts to U.S residents. BlockFi users can earn up to 9.25% APY in crypto with a BlockFi Interest Account.
At the time of writing, there were no references to the SEC settlement on the BlockFi website. There were details on the cease-and-desist order from New Jersey and show-cause orders from the other 4 states, however.