The US Securities Exchange Commission’s enforcement action against BlockFi this week was great news for the hundreds of whistleblowers who have filed claims of fraud and wrongdoing in the cryptocurrency industry.

For the first time, the SEC settled a case that alleged a crypto lending platform violated securities laws by failing to register the offers and sales of its retail crypto product.

BlockFi agreed to pay a total of $100 million to settle the case, which is the largest SEC settlement ever paid by a cryptocurrency company. The crypto lending and trading platform also agreed to cease offering or selling BlockFi Interest Accounts (BIAs) in the US.

The SEC said that BIAs are securities as defined in current law, and therefore, the company was required to register its offers and sales of BIAs. BlockFi, however, had failed to do so.

The SEC also said that BlockFi violated the law by operating for more than 18 months as an unregistered investment company, since it issued securities and held more than 40 percent of its total assets, excluding cash, in investment securities. Those investment securities, the SEC said, included loans of crypto assets to institutional borrowers.

According to the SEC, BlockFi also misrepresented the level of risk in its loan portfolio and lending activity.

"Adherence to our registration and disclosure requirements is critical to providing investors with the information and transparency they need to make well-informed investment decisions in the...

Read Full Story: https://www.forbes.com/sites/erikakelton/2022/02/18/whistleblowers-in-crypto-...