Texas Regulators Issue Cease-And-Desist Order Against Crypto Lending Platform BlockFi

The Texas State Securities Board (TSSB) issued a cease-and-desist order against crypto trading and lending platform BlockFi alleging that BlockFi’s Interest Account (BIA) product is a security under state rules.

What Happened: According to a report from CoinDesk, if the order takes effect after a hearing in October, then BlockFi wouldn’t be able to offer its BIA product without first registering with the TSSB.

“The BIAs constitute investment contracts, notes, or evidences of indebtedness regulated as securities as that term is defined by Section 4.A of the Securities Act,” stated the TSSB in a filing.

Users that deposit their cryptocurrency into BlockFi’s Interest Account earn over 7% APY with interest accrued daily and paid monthly.

The TSSB estimates that BlockFi has at least 25,000 clients in Texas with $691 million in total assets.

Earlier this month, two other U.S. states – Alabama and New Jersey – filed similar notices alleging that BlockFi’s crypto interest product was in violation of local securities laws.

BlockFi CEO Zac Prince took to Twitter to assure existing BIA clients that the order would not impact them or any of their investment in other BlockFi products.

We remain firm in our belief that the BlockFi Interest Account is not a security.

We are fully operational for all of our existing clients in New Jersey and worldwide, who continue to have access to all products, services, and assets on the BlockFi platform.

— Zac Prince (@BlockFiZac) July 21, 2021

“We will continue to engage with all relevant authorities to protect our clients’ interests and expand accessibility to innovative financial solutions for all,” said Prince.

Price Action: At press time, Bitcoin was trading at $33,509, up by 3.81% in the past 24-hours.

The market-leading digital asset had a trading volume of $19 billion accounting for 45% of the market at the time of writing.

Read also: Polychain, A16z Face Unregistered Security Lawsuit Over Internet Computer Token Sale