INDIANA – Indiana Secretary of State Holli Sullivan announced the office’s Securities Division has joined 31 other state regulators and the SEC in a $100 million settlement with BlockFi Lending, LLC. (“BlockFi”) related to cryptocurrency offerings made to Indiana residents.
Regulators found that BlockFi issued securities, including digital asset lending products that were neither registered with the Securities Division nor exempt from registration requirements.
“More than 5,000 Hoosiers invested assets worth more than $92 million with BlockFi,” Secretary Sullivan said. “These cryptocurrency accounts skirted regulations designed to protect investors and hold industry members accountable. I encourage all investors to use caution when it comes to evaluating offerings related to cryptocurrency and do research before placing their life savings into any new and potentially volatile markets.”
The securities, called “BlockFi Interests Accounts” (“BIAs”) offered monthly interest to investors who set up accounts in which they deposited digital assets. The Division alleges that the accounts, which lack the protections offered by the FDIC or SIPC, were pooled and used to fund BlockFi’s lending and trading operations. The Securities Division alleges that such offerings failed to comply with registration requirements enacted in state law before the securities could be lawfully offered and sold within Indiana.
The multi-jurisdictional action is brought by members of the North American Securities Administrators Association (“NASAA”), of which the Indiana Securities Division is a member, and the SEC.
BlockFi’s $943,396.22 payment to Indiana is part of a larger settlement totaling $100 million dollars, with $50 million to be paid to 53 participating NASAA members and $50 million to the SEC. As part of the agreement, BlockFi agreed to cease offering the cryptocurrency interest accounts in Indiana until properly registered. BlockFi may continue to deploy digital assets to existing investors and may continue to pay interest. Between February 14th and the date BlockFi’s securities are registered and qualified or permitted for sale with the states and SEC, current investors may keep their existing investments with BlockFi and will continue to earn interest under their initial agreement with the company. This measure is designed to protect the interests of existing investors while allowing BlockFi time to bring itself into compliance with state and federal law.
The Securities Division encourages investors to reach out if they believe they have been victimized by a cryptocurrency-related offering. To do so, please contact the Securities Division at firstname.lastname@example.org, (317) 232-6681 or file a complaint online through the Indiana Securities Portal.