BlockFi, a cryptocurrency lending service, has come under pressure from the New Jersey Bureau of Securities over its business. According to BlockFi CEO, Zac Prince, the company received an order from the New Jersey Bureau of Securities regarding BlockFi Interest Account (BIA) operations in the State of New Jersey. He notes the service remains "fully operational" for its existing customers in New Jersey.
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The New Jersey watchdog — according to Forbes — calls for BlockFi to stop accepting new BlockFi Interest Account clients residing in New Jersey beginning July 22, 2021 as the company has been funding its business at least partly through the sale of unregistered securities. Hence, the New Jersey Bureau of Securities assumes the company violated relevant securities laws.
BlockFi is engaged in an ongoing dialogue with regulators to help them understand our products, which we believe are lawful and appropriate for crypto market participants. BIA is not a security, and we therefore disagree with the action by the New Jersey Bureau of Securities.
— Zac Prince (@BlockFiZac) July 20, 2021
The move comes after recent reports claimed that BlockFi was in the final stages of fundraising at a valuation of $5 billion. According to persons familiar with the matter, the company planned to raise funds from big investors, including Third Point Management and Hedosophia.
As of press time, BlockFi's valuation is set at $3 billion. The latest investment round included such investors as Bain Capital Ventures, partners of DST Global, Pomp Investments and Tiger Global.
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