Zac Prince, CEO of BlockFi, confirmed earlier this week that the company had received a cease and desist order from the New Jersey Securities Bureau.
According to Zac Prince, managing director of BlockFi, the New Jersey Securities Bureau (NJBoS) has demanded that the crypto lending company stop offering interest-bearing cryptocurrency accounts to its new customers. The New Jersey-based company has been offering the BlockFi interest account (BIA) since 2019. Prince has since revealed that the order does not affect any existing clients, and as such, all aspects of the BlockFi portfolio will remain accessible to those clients.
« We remain fully operational for our existing customers in New Jersey. All aspects of the BlockFi platform continue to be accessible to our New Jersey customers. The order calls for BlockFi to stop accepting new BIA customers residing in New Jersey as of July 22, 2021 “, revealed Prince.
He also reiterated that BlockFi remains committed to working with the authorities to discuss their available products, which he described as compliant and appropriate. He then clarified that NJBoS ‘ assumption that BIA was a security was inaccurate, insisting that the company will continue to protect the interests of customers.
New Jersey Acting Attorney General Andrew Bruck explained that the order resulted from the sale of unregistered securities, which is a violation of New Jersey securities laws. He reiterated that the state has been closely monitoring the crypto sector to ensure compliance with the investor law, warning that no party is exempt from the law.
« No one gets a free pass simply because they operate in the rapidly evolving cryptocurrency market. »
Bruck also noted that BlockFi does not offer said cryptocurrency interest accounts in other states such as New York, which he said could be due to the laws in those states. After the announcement, Kaitlin Caruso, Acting Director of the Division of Consumer Affairs, pointed out that DeFi products carried significant levels of risk, even greater than the risk resulting from crypto volatility. She warned that while institutions such as BlockFi seemed to match traditional financial platforms, they left investors exposed and vulnerable.
The New Jersey order was not welcomed by users, who insisted that BlockFi did not offer securities through their paid accounts. Some argued that New Jersey’s decision may have been aimed at protecting banks. After New Jersey pitched the BlockFi boat, the Alabama Securities Commission followed suit. Yesterday, the commission ordered BlockFi to ” prove your good faith “, on pain of being banned from activity for offering unregistered securities.