California issues notice to suspend BlockFi’s license

Key Takeaways:

  • BlockFi’s license in California has been suspended for 30 days while an investigation is ongoing.
  • In response to BlockFi stopping withdrawals, the decision was made.

The California Department of Financial Protection and Innovation (DFPI) declared that it was thinking about dismissing BlockFi’s lending license while the department investigated the cryptocurrency lender.

The DFPI takes its duty to exercise supervision very critically. Any person selling securities, lender, or other provider of financial services doing business in California is expected to abide by the regulator’s financial laws.

A DFPI press release states that the action was taken in response to BlockFi stopping withdrawals. This was done on Thursday night by the lender, who cited an absence of clarity surrounding FTX. BlockFi received a $400 million line of credit earlier this year from the exchange’s FTX US division.

According to DFPI, the dismissal will last for at least 30 days. The DFPI stated in a declaration that it is looking into FTX and the conformance of BlockFi with the regulations within the Commissioner’s jurisdiction, including the California Financing Law.

In response to media reports about the unsettled FTX, BlockFi said on Thursday that it was “surprised” and that it would restrict platform operation and halt customer withdrawals “as is permitted under our Terms.”

BlockFi stated on Twitter that it was unable to conduct normal operations due to ambiguity regarding the future of the FTX exchange and related businesses, along with the trading firm Alameda Research.

BlockFi requests that customers refrain from making deposits to the BlockFi Wallet or its interest accounts and informs the DFPI that it no longer provides loans in California.

BlockFi was ordered by the Commissioner to stop providing or selling unqualified, non-exempt securities in the form of Blockfi interest accounts in California in February 2022.

According to the officially published document, the order will not directly affect or impede the responsibility of any previously established valid contract between BlockFi Lending LLC and any borrower, in accordance with Financial Code section 22716.

Without a doubt, the crypto community has experienced a rollercoaster of a month, but the ride seems to be never-ending with dwindling prospects for a turnaround.

Many believe that even worse circumstances are yet to come.

Aadrika Sharma
Aadrika Sharma

I enjoy writing and try to learn new things every passing day!

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