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The U.S. Securities and Exchange Commission (SEC) has focused its sights on another blockchain-based company – this time it’s BlockFi. The SEC seems to be concerned with BlockFi’s high interest rates for lending out staked digital tokens from clients who opt-in for that very purpose.
The SEC is questioning if those BlockFi accounts might be securities, requiring registration with the agency to be eligible to operate. BlockFi promotes annual percentage yields up to 9.5 percent on its website, which is much higher than most traditional bank savings accounts that offer less than 0.5 percent. A few states, such as Texas and New Jersey have taken action against BlockFi for subpar customer protections and questionable marketing tactics.
What’s ironic is that most crypto lenders and decentralized finance companies – as well as BlockFi — are able to provide retail investors such outstanding returns, because they charge institutional investors much higher fees to access crypto markets. The sky-high fees paid by big banking and financial fiefdoms actually trickle down to individual investors – benefiting the little guy for once. But why let those facts get in the way of a good SEC investigation.
BlockFi is privately held and was most recently valued at $4 billion with more than a half million retail accounts on the books. It’s important to note that the SEC hasn’t accused BlockFi of any wrongdoing or criminal activity, and not all agency investigations lead to enforcement actions.
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