The Iowa Insurance Division, or IID, the regulator responsible for many securities sales in the state, fined cryptocurrency lending company BlockFi more than $943,000 after it allegedly offered and sold unregistered securities.

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In a statement on Tuesday, the state regulator said BlockFi “offered and sold securities in Iowa that were not registered or authorized for sale in Iowa,” in addition to not being registered as a broker-dealer or agent in violation of the State Securities Act. The IID ordered BlockFi to pay $943,396.22 in administrative fines and to cease and desist “from any false statement of material fact relating to the securities.”

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“While innovations such as cryptocurrencies can help the growth and development of the financial system, it is important that regulators ensure this is done within an appropriate framework that protects investors while promoting responsible capital formation,” said Iowa Insurance Commissioner Doug Ommen. .

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The financial penalty order was part of an investigation by the U.S. Securities and Exchange Commission (SEC) in which BlockFi was ordered to pay $50 million in damages to a federal agency, as well as $50 million to 32 state regulators. According to the IID, BlockFi allegedly misrepresented and remained silent on the level of risk in its loan portfolio and claimed that its institutional loans are “usually” over-collateralized, although this claim was only true for 17% of loans originated by the platform in the first half of 2021. of the year.

“BlockFi’s claims that their loans were ‘usually’ over-collateralized led investors to believe they provided more default protection than BlockFi actually provided,” IID said in a post.

In 2021, federal and state regulators appear to have targeted many crypto lending platforms, with the New York Attorney General’s Office ordering two firms to “cease any such activity” while potentially investigating three others. Financial regulators from a number of US states, including Texas, New Jersey, Alabama, Kentucky, and Vermont, said in 2021 that BlockFi offered securities without a state or federal license.

Are you happy when you are being regulated? Dropout from BlockFi settlement is the subject of speculation

BlockFi CEO Zack Prince announced on Monday that the firm will lay off 20% of its workforce, reducing its workforce to just over 600, citing the need to meet profitability targets. It’s unclear if financial sanctions from government regulators played a role in BlockFi’s decision, but the news comes amid extreme volatility in the cryptocurrency market, with the price of bitcoin (BTC), ether (ETH) and more dropping 25-40%. over the past seven days.