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BlockFi faces SEC scrutiny over high yield crypto accounts

Securities and Exchange Commission (SEC) is issuing a probe into BlockFi over their abundant interest-holding accounts.

BlockFi, the crypto lending firm, is under investigation over their interest-holding accounts. The firm became famous as its products gained popularity in the market. There are numerous accounts for users earning up to 9.5 percent. Annually, banks offer a paltry of 0.06 percent. Above all, the crypto savings account is not covered in-state insurance. However, the insurance covers bank deposits by the authorities.

The SEC is aiming for only one thing, to determine if BlockFi accounts are similar to securities. If yes, then the firm will breach the law by not registering the asset class to the authorities. Therefore, the firm will be under obligation to register its products. So far, SEC is not accusing the crypto firm of any mistakes, but it wants to be sure.

BlockFi is not under the scope for the first time. The crypto lending firm is restricted in several states. The authorities believe that the crypto lending firm has the negative potential of security laws. The worrying thing is the firm’s high return accounts.

Texas, Alabama, and New Jersey, all three states, issued warnings to shut the firm down in July. The states report that the BlockFi platform did not out its interest account. It resulted in the distribution of unregistered bonds.

BlockFi entails 500,000 small accounts. The firm offers a wide range of products. And has also done a great job in attracting huge investors. Huge companies like Bain Capital and Tiger Global enterprises have been the backers of BlockFi since 2017.

SEC aims to leave a mark in the field. Recently, the SEC has been peeking into many crypto traders to have a look at their data business. Besides, the regulator has issued numerous warrants to big players in the industry, compelling them to hand over information.

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