BlockFi Inc. is being scrutinized by the U.S. Securities and Exchange Commission over its popular product that pays customers high interest rates for lending out their digital tokens, a development that significantly ratchets up the fast-growing crypto firm’s legal woes.
The SEC review focuses on whether the BlockFi accounts are akin to securities that should be registered with the regulator, according to a person with knowledge of the matter. The Jersey City, New Jersey-based firm touts annual yields as high as 9.5% on its website -- a figure that dwarfs the 0.06% average interest rate for bank savings accounts. States including New Jersey and Texas have already taken action against BlockFi, questioning whether it’s marketing illicit financial products that lack bedrock consumer protections.
