The New Jersey Bureau of Securities is asking crypto wealth manager BlockFi to stop offering interest-bearing accounts.
Acting Attorney General Andrew J. Bruck announced today that the Securities Office has issued a cease and desist order against BlockFi in an effort to protect investors.
According to the Office order, BlockFi has been financing its cryptocurrency lending operations and trading at least in part through the sale of unregistered securities.
“Our rules are simple: If you sell securities in New Jersey, you must comply with New Jersey securities laws.
No one gets a free pass simply because they operate in the rapidly evolving cryptocurrency market. Our Securities Office will closely monitor this issue as we work to protect investors. “
The Office’s actions are a reflection of its concerns about platforms like BlockFi that “seek to reinvent traditional financial systems such as banks and brokerages for investors in digital assets.” The Office emphasizes that investors’ losses are not insured by the Federal Deposit Insurance Corporation (FDIC) or Securities Investor Protection Corporation (SIPC).
Kaitlin Caruso, acting director of the Division of Consumer Affairs, emphasizes these risks.
“Cryptocurrency investment products offered and sold on decentralized financial platforms carry significant risks, even beyond those associated with cryptocurrency volatility.
Platforms like BlockFi may reflect traditional financial structures that we know and trust, but they can actually leave investors extremely vulnerable. “
BlockFi answered at the order of the Table on Twitter.
“BlockFi has been involved in an ongoing dialogue with regulators to help them understand our products, which we believe are legal and appropriate for cryptocurrency market participants.
BlockFi Interest Account (BIA) is not a security and therefore we do not agree with the action of the New Jersey Bureau of Securities. We remain fully operational for our existing clients in New Jersey. All aspects of the BlockFi platform continue to be accessible to our customers in New Jersey.
The order requires BlockFi to stop accepting new BIA customers residing in New Jersey as of July 22, 2021. We will continue to contact all relevant authorities to protect our customers’ interests and ensure our products continue to be available. “.
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