BlockFi announced the reinstatement of its cryptocurrency yield program in a post that was published not too long ago. However, in response to a fine of $100 million imposed by the US SEC, the financial institution temporarily froze the interest-bearing account it maintained (Securities and Exchange Commission).
BlockFi, on the other hand, indicated that the yield-bearing accounts will only be accessible to a select number of US customers. The company intends to make the product available to all users in 2023.
The study states that the yield product will be comprised of a total of 15 digital assets underneath it. Additionally, there would be no requirement for a minimum investment in order to purchase the assets. This enables customers to invest any amount they have available.
Flori Marquez, the Chief Operating Officer and Founder of BlockFi, had some commentary on the current statement. The founder is quoted as saying that:
"In order to register our BlockFi Yield, we are now collaborating with the US SEC." On the other hand, we are pleased to announce to approved investors that they will soon be able to begin collecting interest on cryptocurrency through BlockFi.
In the meanwhile, in the year 2022, crypto lending sites have been the subject of severe regulatory investigation. This arose as a result of the bearish cryptocurrency market, which caused several crypto lenders to go insolvent.
Lending platforms like Voyager and Celsius had to declare for bankruptcy. Additionally, the majority of lending platforms halted both deposits and withdrawals. Users were unable to withdraw their cryptocurrency holdings as a result of this.
BlockFi did not, thankfully, end up filing for bankruptcy. Marquez observed that the company has an effective infrastructure for risk management.
In the midst of the crypto winter, BlockFi laid off 20% of its workforce.
After receiving a notification from the US SEC, BlockFi decided to stop distributing its crypto yield program. The supervisory agency asserted that the financial institution had violated its securities laws.
In February, BlockFi reached an agreement to pay a fine of one hundred million dollars. The regulator received $50 million in direct payment, while the remaining $50 million was distributed to the states of the United States. The Chairman of the Securities and Exchange Commission (SEC), Gary Gensler, indicated that this was the first securities lawsuit involving a cryptocurrency lending platform.
As a consequence of this, this served as a very important warning to other cryptocurrency loan platforms that are now operating in the market. In addition, the US Securities and Exchange Commission has increased the amount of attention it pays to the cryptocurrency business.
According to recent reports, the agency is reportedly looking into a number of different crypto firms right now. The purpose of this investigation is to determine whether or whether they have violated its securities law in the recent past or in the current.
In the meantime, BlockFi, just like most other businesses, has suffered financially due to the bear market in cryptocurrencies. Over twenty percent of the crypto lender's staff was let go in June, with the company blaming the current macroeconomic climate as the reason.
In addition, the company revealed that its loan exposure was above $600 million as of the end of the second quarter of 2022. As a direct consequence of this, the company was compelled to get loans from Sam Bankman-cryptocurrency Fried's startup, FTX.