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BlockFi encounters ‘security’ related regulatory issues in New Jersey

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Source: Adobe / Александр Бердюгин

Regulators appear poised to continue increasing their scrutiny of the crypto industry, with BlockFi , the leading U.S. crypto lending business, which received a cease-and-desist order from the New Jersey Attorney General (AG).

The AG is reportedly willing to accuse BlockFi of violating state securities laws. According to Forbes, who claimed to have obtained a copy of a draft press release from the Attorney General’s offices, Acting Attorney General Andrew Bruck was quoted as saying:

“Our rules are simple. If you sell securities in New Jersey, you must comply with New Jersey securities laws. No one gets a free pass simply because they operate in the rapidly evolving cryptocurrency market. Our Securities Office will closely monitor this issue as we work to protect investors. “

Initially, Zac Prince, the founder and CEO of BlockFi, was quoted as answering:

“The company is not aware of imminent action with the New Jersey Attorney General’s office. We have excellent relationships with New Jersey regulators and other state and federal regulators. “

But later, through the official BlockFi Twitter account, the firm confirmed that it had “received an order from the New Jersey Bureau of Securities regarding the operations of the BlockFi Interest Account (BIA) in the state of New Jersey. Sweater”.

BlockFi added that it “has been involved in an ongoing dialogue with regulators to help them understand our products, which we believe are legal and appropriate for cryptocurrency market participants.”

The firm has admitted, however, that the order requires BlockFi to stop accepting new BIA customers located in New Jersey as of July 22, 2021.

But, he added,

“BIA is not a security and therefore we do not agree with the action of the New Jersey Office of Securities. All aspects of the BlockFi platform continue to be accessible to our customers in New Jersey. We will continue to work with all relevant authorities to protect the interests of our customers and to ensure that our products continue to be available. “

Jake Chervinksy, the general counsel of Compound (COMP), urged the crypto community to wait and see exactly what the cease-and-desist order highlighted before rushing to conclusions, writing on Twitter that until then “we have no idea if this is a major crypto problem, just a BlockFi issue or nothing at all. “

Matthew Ballensweig, Director and Head of Lending at Genesis Trading He also called for restraint and opined that “there was probably nothing in the short term that came from this other than increased regulatory uncertainty.”

He added:

“I can’t imagine this having any impact on crypto loan rates for now. New Jersey depositors will simply lend elsewhere. “

Some suggested that uniswap (UNI) -related controversies may be at stake, and the token has come under increased scrutiny in recent weeks.

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