The New Jersey Securities Office is calling on crypto wealth manager BlockFi to stop offering interest-bearing accounts.
Acting Attorney General Andrew J. Brooke announced today that the Securities Exchange Office has issued a cease-and-desist order against BlockFi in an effort to protect investors.
According to the office OrderBlockFi has financed cryptocurrency lending 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 the New Jersey securities laws.
No one gets a free pass just because they work in the rapidly developing cryptocurrency market. Our securities office will monitor this issue closely while we work to protect investors.”
The office’s actions are a reflection of their concerns about platforms such as BlockFi that “seek to reinvent traditional financial systems such as banks and brokerages for digital asset investors.” The office confirms that investors’ losses are not insured by the Ministry of Trade and Industry The Federal Deposit Insurance Corporation (FDIC) or the Securities Investor Protection Corporation (SIPC).
Caitlin Caruso, Acting Director of Consumer Affairs, stresses these risks.
“Cryptocurrency investment products offered and sold on decentralized finance platforms carry significant risks, even those associated with cryptocurrency volatility.
Platforms like BlockFi may mirror the traditional financial structures we know and trust, but in reality they can leave investors very vulnerable.”
BlockFi replied To order the office on Twitter.
“BlockFi has been engaged in an ongoing dialogue with regulators to help them understand our products, which we believe are legal and appropriate for crypto market participants.
The BlockFi Interest Account (BIA) is not a security, and as such we disagree with the action taken by the New Jersey Bureau of Securities. We are still fully operational for our existing clients in New Jersey. All aspects of the BlockFi platform are still available to our New Jersey clients.
The order calls on BlockFi to stop accepting new BIA clients residing in New Jersey effective July 22, 2021. We will continue to engage with all relevant authorities to protect our clients’ interests and ensure that our products remain available.”
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