Maryland, Securities Regulators Settle With BlockFi Over Alleged Failure to Register When Selling Crypto Securities

Lori Kalani, Bernard Nash
Cozen O'Connor
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  • Maryland AG Brian Frosh and the Securities Commissioner of Maryland joined other state securities regulators and the US Securities and Exchange Commission in reaching a settlement with digital-asset financial services company BlockFi Lending LLC to resolve allegations that BlockFi illegally sold unregistered securities in the form of interest-bearing digital assets.
  • According to the Consent Order, BlockFi sold investment vehicles through which investors lent BlockFi digital assets in return for BlockFi’s promise to provide variable monthly interest payments in cryptocurrency, but BlockFi allegedly did not register its offer and sale of securities in violation of state law and did not properly disclose the potential risks of the lending products.
  • BlockFi will pay $50 million in settlement payments to the 53 state securities agencies, $50 million to the SEC, and $943,396.22 in civil monetary penalties to the Maryland AG Office. BlockFi will also cease selling unregistered securities in Maryland to new customers, but it will continue to pay existing investors interest and utilizing their invested assets.

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