The Alabama Securities Commission (ASC) has issued a show cause order to BlockFi. According to an official press release, the New Jersey-based cryptocurrency firm has 28 days to explain "why they should not be directed to cease and desist from selling unregistered securities in Alabama."
Subscribe to our Telegram channel to stay up to date on the latest crypto and blockchain news.
ASC Director, Joseph Borg, believes that the firm raised at least $14.7 billion worldwide through the sale of securities, which are used for interest earning cryptocurrency accounts called BlockFi Interest Accounts (BIAs)
"The Alabama Show Cause Order alleges that BlockFi through its affiliates BlockFi Lending and BlockFi Trading has been funding its cryptocurrency lending operations and proprietary trading at least in part through the sale of unregistered securities in violation of the Securities Law," the watchdog said.
The ASC action comes amid rising concerns over the proliferation of decentralized finance platforms like BlockFi that seek to reinvent traditional financial systems such as banks and brokerages for digital asset investors, the regulator noted. This is the second attack on BlockFi after the cryptocurrency company came under pressure from the New Jersey Bureau of Securities over its business.
The New Jersey watchdog called for BlockFi to stop accepting new BIA 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.
Access more than 50 of the world's financial markets directly from your EXANTE account – including NASDAQ, London Stock Exchange and Tokyo Stock Exchange.