The U.S. Securities and Exchange Commission reported:
The Securities and Exchange Commission today charged BlockFi Lending LLC (BlockFi) with failing to register the offers and sales of its retail crypto lending product. In this first-of-its-kind action, the SEC also charged BlockFi with violating the registration provisions of the Investment Company Act of 1940. To settle the SEC’s charges, BlockFi agreed to pay a $50 million penalty, cease its unregistered offers and sales of the lending product, BlockFi Interest Accounts (BIAs), and attempt to bring its business within the provisions of the Investment Company Act within 60 days. BlockFi’s parent company also announced that it intends to register under the Securities Act of 1933 the offer and sale of a new lending product. In parallel actions announced today, BlockFi agreed to pay an additional $50 million in fines to 32 states to settle similar charges.
The press release did not identify BlockFi's parent, It's Gemini Trust, co-founded by the billionaire Winklvoss twins. Policy making billionaires get kid glove treatment from government officials.
Without admitting or denying the SEC’s findings, BlockFi agreed to a cease-and-desist order prohibiting it from violating the registration and antifraud provisions of the Securities Act and the registration provisions of the Investment Company Act. BlockFi also agreed to cease offering or selling BIAs in the United States.
Settlements without charges are common for the wealthy and politically connected. Carlyle Group co-founder David Rubenstein invested in Paxos. BlockFi offers Paxos Standard and Paxos Gold.
Rubenstein and the Winklevoss twins can afford to lose a lot and still have more than one king's ransom. The greed and leverage boys love flipping equity stakes but enjoy fee collecting just as much. Customers who like bank fees will love crypto.
Experts warn to only invest in cryptocurrency what you can afford to lose. Recognize the crypto game is stacked toward billionaire backers. That's not you.
Update 2-15-22: The U.S. Securities and Exchange Commission is warning investors about risks associated with accounts that pay clients high interest rates for depositing crypto assets. Risks that retail investors face generally with crypto assets, including price volatility and possible fraud.
Update 2-16-17: MarketWatch said "Look at it like you’re a gambler walking into a casino.’ Here’s exactly how much of your nest egg financial pros say should be invested in crypto.
Update 5-11-22: Fortune reported:
In the event the crypto exchange goes bankrupt, Coinbase says, its users might lose all the cryptocurrency stored in their accounts too.
Update 6-2-22: MarketWatch reported:
Billionaire twins Cameron and Tyler Winklevoss announced that 10% of jobs at their cryptocurrency exchange and custodian, Gemini Trust, would be eliminated.
Update 11-29-22: More funny money implodes:
Crypto lender BlockFi has about $355 million in cryptocurrencies currently frozen on crypto exchange FTX, attorney Joshua Sussberg told a U.S. bankruptcy court on Tuesday.
The $355 million is on top of another $671 million in loan to FTX sister company Alameda Research.
Update 9-28-23: NYPo reported:
Cameron and Tyler Winklevoss secretly withdrew more than $280 million held by their crypto company’s bank — mere months before the firm’s collapse left the twins’ customers unable to access their deposits,
