BlockFi Faces Fine for Allegedly Registering Improperly 

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Key Takeaways 

  • BlockFi was found selling unregistered assets by NASAA. 
  • The exchange lacked transparency while issuing loans. 

The crypto market is going through one of the biggest crashes in the history of virtual assets. It started with the Luna debacle and caught the attention of regulators around the world, especially the SEC. Authorities are conducting investigations to gather more information about the sudden fall of the currency. 

Owing to that, on June 14, the Iowa Insurance Commissioner Doug Ommen has issued a consent order against BlockFi to pay an administrative fine of more than $943,000 as it failed to register as a securities trading platform and also ceased issuing any false statements related to securities. The exchange was trading securities that were not registered or permitted for sale in the state. 

A broader multi-state investigation was conducted by the North American Securities Administrators Association (NASAA) which includes the U.S Securities and Exchange Commissioner (SEC) and state securities regulators from 53 jurisdictions and the consent order is a concluding part of it. 

The investors of BlockFi were devoid of proper information as the exchange misrepresented and omitted details about the risks involved in its loan portfolio. The Commissioner said, “While innovations, like cryptocurrencies, may provide for growth and evolution in the financial system, it is important that regulators ensure this occurs within an appropriate framework that protects investors while still facilitating responsible capital formation.” 

BlockFi even stated that the loans they were issuing were “typically” over-collateralized which led the investors to believe that they were offering more security than the default. “Iowans can always double-check before investing to make sure an investment is properly registered with the Iowa Insurance Division by calling 877-955-1212,” said the Commissioner.  

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Shreya Bhattacharya
Shreya Bhattacharya

A journalist & writer exploring new topics every day!

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