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BlockFi Ordered to Pay Close to $1M in Iowa For Failing to Register Securities

Tyler Irvin

Summary: BlockFi was ordered to pay a fine by Iowa insurance commissioner Doug Ommen of $943,396.22 for failing to register securities that were sold in Iowa, according to a consent order against BlockFi filed on June 8.  “While innovations, like cryptocurrencies, may provide for growth and evolution in the financial system, it is important that regulators ...

BlockFi was ordered to pay a fine by Iowa insurance commissioner Doug Ommen of $943,396.22 for failing to register securities that were sold in Iowa, according to a consent order against BlockFi filed on June 8. 

“While innovations, like cryptocurrencies, may provide for growth and evolution in the financial system, it is important that regulators ensure this occurs within an appropriate framework that protects investors while still facilitating responsible capital formation,” Ommen said. 

In addition, BlockFi sold securities in Iowa without being registered as a broker-dealer or agent. Unfortunately for BlockFi, their misconduct didn’t stop there. BlockFi also made “misrepresentations and omissions” about the level of risk in its loan portfolio preventing investors from the ability to make their decision based on complete and accurate information. 

This consent order comes in part of a February 14 conclusion of a broader multi-state investigation carried out by the U.S. Securities and Exchange Commission (SEC) and state securities regulators from 53 jurisdictions, where BlockFi was ordered by the SEC to pay a $100 million penalty. 

That $100 million penalty was split up into two $50 million payments: one given to the SEC and the other split up between the 53 jurisdictions. The $943,396 represents 1/53 of the $50 million dollar payment said to be split between the 53 jurisdictions. 

“Whatever investors’ knowledge or interest in cryptocurrency, investors need accurate information to base their decisions on,” Ommen said.  “Iowans are encountering new innovations in the investment area with the advent and greater adoption of cryptocurrencies, however, speculative investments such as these should be handled just as such – as speculative. 

The press release concluded by saying that as of December 31, 2021, BlockFi and its affiliates held approximately $14.5 million in assets from Iowa residents. 

Author: Tyler Irvin

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Link: BlockFi Ordered to Pay Close to $1M in Iowa For Failing to Register Securities   [Copy]
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