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Iowa State Regulator(IID) following an investigation by the US Securities and Exchange Commission (SEC) and other regulators demanded that BlockFi pay an administrative fine of about $1 million.
According to the Commissioner of Insuranceof Iowa, Doug Ommen, cryptocurrency lending service BlockFi will have to pay $943,396.22 for listing and selling securities without proper registration and regulatory approval.
In addition, the regulator ordered the companystop working in the state immediately. Regulators should protect residents from any investments that do not have a legal basis, Ommen said. He urged Iowans to check the IID license of any investment platform before investing in it.
“Although innovations such as cryptocurrenciescan ensure 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 accumulation,” he said.
IID claims that BlockFi introducedmisleads users by claiming that its institutional loans are over-collateralized when, according to investigations, this is not the case. This situation has led to Iowans putting their money into a platform that offers speculative investments without informing its clients, Ommen said.
The order to pay BlockFi a fine came aftera multi-state investigation involving the SEC and other state securities regulators from 53 jurisdictions. In February, regulators determined that BlockFi must pay up to $50 million in damages to the SEC and another $50 million to US states that brought similar charges.
In early June, BlockFi's valuation fell from $5 billion to2021 up to $1 billion due to numerous inspections of the company’s activities by regulators. The company has not yet made an official statement about the fine imposed by IID, but such a significant payment could seriously affect the stability of the company, which is going through difficult times.
BlockFi recently announced that it intends to lay off 170 of its employees due to the difficult economic situation.
