New Jersey orders cryptocurrency firm BlockFi to stop offering interest-bearing accounts

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Representations of virtual currency bitcoin on a US dollar banknote are shown through broken glass in this illustration taken on June 25, 2021. REUTERS / Dado Ruvic / Illustration

July 20 (Reuters) – New Jersey ordered cryptocurrency platform BlockFi Inc to stop offering interest-bearing accounts that have raised $ 14.7 billion from investors, the prosecutor said on Tuesday Acting General of the State.

A cease and desist order from the New Jersey Securities Office said that BlockFi’s accounts were not registered with that office or exempted from registration, and that their sale violated the securities laws of the United States. New Jersey.

Andrew Bruck, the Acting Attorney General, said the enforcement action against Jersey City, New Jersey-based BlockFi came amid concerns over the growth of decentralized funding platforms for investors in digital assets.

According to the order, investors can purchase BlockFi interest accounts by depositing cryptocurrencies such as Bitcoin and Ethereum with the company, which uses them to fund lending and own-account transactions.

The order states that BlockFi offers returns of 0.25% to 7.5%, depending on the amount and assets deposited.

In contrast, the average interest rate for savings accounts nationwide was 0.06% on June 30, according to Bankrate.com. BlockFi accounts do not have federal deposit insurance.

“Our rules are simple: If you sell securities in New Jersey, you must comply with New Jersey securities laws,” Bruck said in a statement. “No one gets a free pass just because they operate in the rapidly evolving cryptocurrency market.”

The order takes effect July 22 and does not affect existing BlockFi interest accounts. Bruck said BlockFi does not offer the accounts in New York and some other jurisdictions.

BlockFi said in a statement that it disagreed with the order because the accounts were not securities.

It also said it remains fully operational for existing New Jersey customers and believes its products are “legal and appropriate for crypto market participants.”

In March, BlockFi said it completed a $ 350 million funding round that valued the company at $ 3 billion.

Reporting by Jonathan Stempel in New York; Editing by Richard Chang


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