BlockFi announced on June 28 that it has scored itself a Money Services License in the state. Just two weeks earlier it has been fined by Iowa’s regulators for offering and selling unregistered securities.
The Iowan license will permit the crypto lender to receive money and sell payment instruments in the state. BlockFi Twitted that it will begin by allowing Iowan residents to trade stablecoins.
Earlier on June 14, the Iowa Insurance Division (IID) which is answerable for securities sales in the state fined BlockFi over $943000 for violations of the state’s Securities Act. IID alleged BlockFi had “offered and sold securities in Iowa that were not registered or allowed for sale in Iowa” along with failing to register as a broker-dealer or agent.
The fine was brought by the United States Securities and Exchange Commission (SEC) in February for not registering an offering of high-yield interest accounts that the commission believed to be securities.
The fine was one of the largest penalties ever imposed by a federal regulator on a crypto business. BlockFi was knockout with $100 million in settlements, with half paid to the SEC and the other half to 32 states which brought forward similar charges.
Though BlockFi intended to register with the SEC for a crypto interest-bearing security for its U.S. customers to replace its current interest accounts offering.
In the worsening market conditions and falling crypto prices, the new license is a shine of good news for BlockFi which has struggled along with other blockchain and crypto companies.
On June 16, BlockFi was forced to liquidate some of the positions from venture firm Three Arrow Capital (3AC) with the latter unable to meet a margin call on its Bitcoin (BTC) borrowings.
The rival crypto lending platform, Celsius, on June 13, paused customer withdrawals attributing the decision to the market conditions. Other reports surveyed that the company was facing liquidity issues and would soon be facing bankruptcy.
BlockFi CEO Zac Prince saying on June 14 that it would be letting 20% of its staff go to remain profitable. It’s indefinite how much of an effect the SEC’s financial penalties had on the decision.
Just a week later on June 21, BlockFi got a lifeline from crypto exchange FTX which saw BlockFi sign a revolving credit facility agreement for $250 million to boost the firm’s balance sheets and strengthen the platform.
Days later, it was stated that FTX may be in talks to purchase a stake in BlockFi, while a BlockFi representative told Cointelegraph on June 24 that it “does not comment on market rumors” and is “still negotiating the terms of the deal”, and stockholders are reportedly not happy with the move as it would wipe out shareholder equity.
According to a report, Anthony Pompliano’s investment firm Morgan Creek is trying to put together an alternative $250 million deal to buy a majority stake in BlockFi.
Leave a Reply