BlockFi Reportedly Investigated by the SEC for High Yield Interest Rates
The New Jersey-based crypto lending platform BlockFi has caught the attention of the U.S. Securities and Exchange Commission SEC because of its supposed high yield interest rates on crypto lending.
- According to a Bloomberg coverage on Wednesday (November 17, 2021), an anonymous source revealed that the SEC was scrutinizing BlockFi.
- The company’s lending products are said to yield up to 9.5% annually, which is significantly higher than the average interest rate for bank accounts at 0.06%.
- The SEC’s investigation is checking to see whether the firm’s products fall under securities, and therefore come under the ambit of the U.S. regulator. But Zac Prince, the CEO of BlockFi, earlier said that the platform’s accounts could not be classified as security.
- While the SEC is the latest regulatory body to focus on BlockFi, other state regulators in the U.S. have also taken action against the company.
- As reported by CryptoPotato back in July, the New Jersey Bureau of Securities ordered the lending platform to stop offering its BlockFi Interest Account (BIA), stating that the product violated securities laws.
- The New York regulatory agency also ordered the firm to stop accepting new clients from July 22.
- Although the SEC is yet to take any action against BlockFi, the securities watchdog in September threatened to sue the cryptocurrency exchange giant Coinbase if the company launched its planned lending program. Coinbase later shelved the service following mounting pressure from the SEC.