Four US states – New Jersey, Alabama, Texas, and Vermont – have said New Jersey-based cryptocurrency platform BlockFi may have violated securities law by offering its interest-bearing accounts within their jurisdictions.
All four states said the cryptocurrency platform did not register its BlockFi Interest Accounts (BIAs) with state regulators and that they may be unregistered securities offerings.
“Our rules are simple: if you sell securities in New Jersey, you need to comply with New Jersey’s securities laws,” Andrew Bruck, the state’s acting attorney-general, said on Tuesday. “No one gets a free pass simply because they’re operating in the fast-evolving cryptocurrency market.”
The regulatory scrutiny at the state level was particularly significant because it came as national authorities in Washington have been working on new rules for cryptocurrencies.
The state regulators said BlockFi offered an “attractive” annual interest rate — of up to 8.6%, according to the Texas filing — in return for deposits of cryptocurrencies such as Bitcoin and Ethereum in its BlockFi Interest Account (BIA). In March, the deposits of the embattled cryptocurrency lender amounted to “the equivalent of $14.7bn”, according to the New Jersey authorities.
BIA allows clients to deposit their cryptocurrencies and earn interest, depending on how much and which types of assets are deposited.
In response, BlockFi CEO Zac Prince stated on Twitter its interest-bearing account “is not a security” and believed it was “lawful and appropriate for crypto market participants,” and added: “We remain steadfast in our commitment to fight for consumers’ rights to earn interest on their crypto assets.”
Later, according to BlockFi’s website, securities regulators in Vermont have issued an order on the matter. What that order said is not yet known.
As reported before, the world’s largest crypto exchange Binance faced regulatory scrutiny in a number of countries, including the Cayman Islands, Japan, Thailand, the U.K., and the U.S.