SEC Halts $30M Fine: BlockFi Investors to Get Paid First
BlockFi's $30 million SEC fine is on hold until investors receive their money.
The US Securities and Exchange Commission (SEC) has paused a $30 million fine on BlockFi, a digital asset lender, until the company's investors are paid back.
Last year, the SEC fined BlockFi for not properly registering its crypto lending product with US investors. The company agreed to pay a $50 million penalty and stop selling this product in the US.
Regulators in 32 states also fined BlockFi an extra $50 million. However, BlockFi went bankrupt in November due to the collapse of the FTX Exchange, which left a $1 billion gap in its finances.
Recently, the SEC asked to delay BlockFi's remaining $30 million fine. This is to avoid slowing down repayments to investors. It's still unclear how the state regulators will react.
BlockFi has been working to pay back its clients and fines since the beginning of the year. In January, the company got permission from a court to sell its crypto-mining assets.
Then in May, a judge in New Jersey ruled that $300 million in BlockFi's wallets should go back to users. Now with the SEC's help, it seems more likely that clients will get their money back.
However, court papers show that the money recovered for BlockFi's investors and customers will largely depend on the company's claims against the collapsed FTX Exchange and its trading firm, Alameda. BlockFi has about $355 million in crypto frozen on FTX and another $671 million loaned to Alameda.
