SEC Ratchets Up Crypto Crackdown

Crypto startup BlockFi agreed to pay $100 million to settle allegations from the SEC and state regulators that it illegally offered a product violating securities law. From a report: This is the largest-ever penalty against a cryptocurrency firm and the first in which a crypto company was charged with violating the registration provisions of the Investment Company Act of 1940. Through its action, the SEC is setting a precedent with regard to its handling of crypto lending accounts, clarifying that it views these types of offerings as securities and will regulate them as such. Beginning in March 2019, BlockFi began offering so-called interest accounts to the public, in which investors lent the company crypto assets in exchange for its promise to provide a variable monthly interest payment. BlockFi then pooled investor assets and exercised full control over how much to hold, lend and invest. Details: According to the SEC, BlockFi misled investors about the level of risk they were taking on by lending out their crypto assets, and that they didn't have the information they needed to make appropriate investment decisions.

just wait for some crypto person to go to FPMIA

[Joe_Dragon]

just wait for some crypto person to go to FPMIA for money laundering.

Party like it is 1999. again.

[AlanObject]

Where does a "startup" get $100M of free cash to spend?

Re:

[Luthair]

Apparently by gambling with the assets of its customers.

Sincerely hope the penalty

[hdyoung]

cost them ALL their profits for the past two years, or more. There are damn good reasons why the financial sector is regulated. You can't just put out a sign that says "Bill's Crypto Bank" and take deposits based on a pinky swear of I'm-honest-trust-me-for-realzies.

Re:

[splutty]

I always find it mind boggling that crypto people have this fantasy that just because they think they 'made something new' that they no longer have to follow the law..

So much wishful thinking in that particular part of the blockchain sphere.

Re:

[GameboyRMH]

I always find it mind boggling that crypto people have this fantasy that just because they think they 'made something new' that they no longer have to follow the law..

An understandable mistake, since the law basically just stood back and looked quizzically at them for basically the entire Trump administration.

Re:

[Registered Coward v2]

I always find it mind boggling that crypto people have this fantasy that just because they think they 'made something new' that they no longer have to follow the law..

An understandable mistake, since the law basically just stood back and looked quizzically at them for basically the entire Trump administration.

Yea. That pretty much sums up that administration, unless of course you were BLM.

Re:

[ceoyoyo]

Because they're right.

It's a time-proven business model. Uber, Lyft, AirBnB, designer drug manufacturers, Ponzi schemes, "massage" parlours, you name it.

You make something new enough that an existing law technically doesn't cover it, or the cops don't understand it, make hay while the sun shines, then shut down, comply, or "pivot" when the law catches up.

Gee Whiz, fellas, he let us know!

[Joviex]

The plan for all cryptocurrencies isn't what you think it is.

And now we can move on with life, and you dont have to waste yours with conspiracies about nada.

Penalty payment

[enriquevagu]

Now BlockFi will use their customer's money to pay the penalty, actuallyincreasing their risk.

i can see

[KingBenny]

this is totally non-biased clientele here - they're choking the child in the cradle to make sure the cro-magnon survives the advent of neanderthals