1300 W. Washington Street
Phoenix, AZ 85007-2996
The Arizona Corporation Commission ordered BlockFi Lending, LLC to pay a $943,396 administrative penalty for offering and selling unregistered securities in the form of interest-bearing digital asset deposit accounts to Arizona investors.
The Commission found BlockFi Lending, LLC (BlockFi) and its affiliates at one point held approximately $155.7 million in BlockFi Interest Accounts (BIAs) in 9,891 accounts sold to Arizona residents. The Commission found the BIAs were securities through which investors lent digital assets to BlockFi in exchange for BlockFi's promise to provide variable monthly interest payments to the investor.
The Commission found BlockFi failed to comply with Arizona’s securities registration requirements and, as a result, investors were sold unregistered securities in violation of state law and deprived of critical information and disclosure necessary to understand the potential risks regarding the BIAs. The Commission found that a statement on BlockFi's website also materially overstated the degree to which BlockFi's collateral practices protected its ability to pay investors.
BlockFi previously agreed to cease allowing new investments in the BIAs and will not allow new investments until its securities are properly registered.
The Commission’s consent order was made possible in part by its Securities Division's participation in a multistate working group of the North American Securities Administrators Association (NASAA) that examined BlockFi’s actions.