Crypto Lender BlockFi To Pay $100M in Fines to US Regulators

BlockFi calls the $50 million in fines to the SEC and a further $50 million to state regulators over its high-interest crypto product “a landmark resolution”

article-image

Blockworks exclusive art by Axel Rangel

share

key takeaways

  • The penalties extend from the SEC’s review of BlockFi’s high-interest yield account last year
  • The lender is prohibited from offering US citizens any new products that resemble its high-interest yield account, while it seeks to register a similar compliant product

Cryptocurrency lending platform BlockFi is expected to pay $100 million in fines to the Securities and Exchange Commission (SEC) and other state regulators over allegations it illegally offered a high-interest yield product.

BlockFi will pay $50 million to the SEC and a further $50 million to various state regulators, according to a Bloomberg report on Friday, which cited people familiar with the matter and confirmed by BlockFi on Monday. US customers will no longer be able to open any new interest-yielding accounts.

In a Twitter thread, Monday, Prince wrote that the settlement “identifies a clear path forward for folks to earn interest on their crypto.”

Loading Tweet..

The penalties come as US authorities continue to spotlight crypto lending activity deemed to be outside the purview of the country’s financial regulations.

BlockFi’s interest account (known as BIA) allows users to lend out their crypto for up to 9.25% in annual percentage yield. A customer lending out $30,000 worth of USDT could expect a return of around $2,907 over a yearly period. By contrast, the average bank interest rate for interest checking accounts in the US is around 0.03% to 0.06%, a return of just $9 and $18 respectively for the same amount.

The settlement extends from the SEC’s investigation into BlockFi last year which came to blows over the lender’s high-yield interest-bearing crypto product.

New Jersey, Alabama, Kentucky, Vermont and Texas also took action last year after raising concerns over whether the lender’s product constituted illegal securities while accusing the platform of providing minimal protections for customers.

Prince noted that no client funds would be used to pay the fines, and that existing customers of the BIA will be unaffected.

Loading Tweet..

He added that BIA customers would see their accounts automatically converted to the new regulatory-compliant framework, dubbed “BlockFi Yield” when feasible.

This story was updated on Feb. 14, 2022 at 11:40 am ET with official comments from BlockFi


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Brooklyn, NY

SUN - MON, JUN. 22 - 23, 2025

Blockworks and Cracked Labs are teaming up for the third installment of the Permissionless Hackathon, happening June 22–23, 2025 in Brooklyn, NY. This is a 36-hour IRL builder sprint where developers, designers, and creatives ship real projects solving real problems across […]

recent research

Unlocked by Template (7).png

Research

Union’s improvements upon Tendermint consensus through CometBLS, coupled with ZK proving through Galois, allow for a broadly scalable, cost efficient, and low latency IBC implementation that is feasibly scalable across every existing blockchain, virtual machine and runtime. The implementation offers modular crosschain interoperability without the need for trusted intermediaries.  

article-image

Kraken’s chief security officer Nick Percoco said the exchange turned the tables on a North Korean hacker

article-image

Or is it approximately the least cypherpunk thing we could do?

article-image

Over 20% of SOL-USD swap volume goes through SolFi

article-image

CEO Vlad Tenev calls expected clarity on listing crypto asset securities “a big opportunity”

article-image

Big Tech pulled US indexes back into the green Thursday, as investors waited for two more Mag 7 first-quarter reports after the bell

article-image

Charts and takeaways from Tuesday’s jobs report and Wednesday’s GDP print, as the economy digests the tariff war