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Three U.S. states have said that the BlockFi cryptocurrency platform’s interest accounts could be security under state regulations. New Jersey, Alabama and Texas have said the crypto platform has not registered its BlockFi interest accounts with regulators. BlockFi CEO Zac Prince said interest-bearing accounts are legal. Sign up for our daily newsletter, 10 things before the opening bell here.
Three U.S. states have said cryptocurrency platform BlockFi may have violated securities law by offering its interest-bearing accounts in their jurisdictions.
All three states – New Jersey, Alabama and Texas – said the cryptocurrency platform has not registered its BlockFi Interest Accounts, or BIA, with respective state regulators, and that it may be ‘act of unregistered securities offers.
BIA allows clients to deposit their cryptocurrencies and earn interest, depending on the amount and types of assets deposited.
On July 20, New Jersey issued a summary cease and desist order prohibiting BlockFi from selling unregistered securities through its BIAs and ceasing to accept new BIAs in the state. The state has declared that this product violates state securities law.
BlockFi CEO Zac Prince revealed in a tweet that New Jersey, where his company is based, granted them a week extension until July 29 before the ban took effect.
The next day, Alabama alleged that BlockFi was selling unregistered securities to partially fund crypto loans.
On July 22, Texas filed a cease and desist order against BlockFi and gave the company 20 days to respond. The state said it informed the cryptocurrency platform as early as April that the company could be in breach of state securities regulations.
Prince argued that BIAs are legal.
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