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BlockFi Receives Fifth ‘Cease-and-Desist’ From Kentucky

The Kentucky Division of Monetary Establishments has grow to be the fifth state regulator to say that BlockFi’s curiosity service violates state securities legal guidelines.

Kentucky’s Division of Securities ordered the crypto lender to cease opening new accounts within the Bluegrass State. Kentucky joins Alabama, New Jersey, Texas and Vermont in alleging that BlockFi Curiosity Accounts (BIAs) violate state securities legal guidelines.

“‘BlockFi’s web site affords cryptocurrency lending and borrowing companies by means of ‘BlockFi Curiosity Accounts’ (BIAs) marketed on its web site. By way of these accounts, buyers could deposit sure cryptocurrencies with the corporate in alternate for a specified rate of interest.’ The corporate has accepted practically $15 billion in these accounts from buyers,” the regulator mentioned in a press launch.

In response, BlockFi introduced it could “instantly” cease signing up new prospects in Kentucky.

Present prospects stay unaffected. Kentucky joins Texas in submitting for a cease-and-desist order, whereas Alabama, New Jersey and Vermont have filed “show-cause” orders.

The corporate has come beneath fireplace on allegations that BIAs violate securities legal guidelines as a result of prospects pool their funds with the corporate, which then lends them to generate revenue.

BlockFi has maintained that in its view, BIAs don’t violate securities legal guidelines in any of the states it operates in.

Lots of the state regulators pursuing allegations towards BlockFi have given the corporate a chance to offer proof in help of its declare. New Jersey has given BlockFi till the start of September to reply, whereas Texas securities regulators have a listening to scheduled for early October.

Regardless of its regulatory woes, the corporate remains to be pursuing a $500 million Sequence E funding spherical forward of a doable preliminary public providing, in line with paperwork reviewed by CoinDesk. Whereas the spherical was anticipated to shut earlier this week, it’s unclear whether or not it has performed so.

UPDATE (July 30, 2021, 23:40 UTC): Clarifies that whereas Kentucky is simply the second state to file a cease-and-desist towards BlockFi, whereas three different states filed show-cause orders.

Source: CoinDesk

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