Vermont Joins Fellow States in Action Against BlockFi

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In Brief
  • Vermont becomes the fourth state to issue an order against BlockFi regarding the legality of its interest-bearing accounts.

  • Texas regulators have petitioned a hearing for a potential cease and desist against BlockFi for October.

  • BlockFi CEO Zac Prince maintains that the BlockFi Interest Account (BIA) is lawful.

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The Trust Project is an international consortium of news organizations building standards of transparency.

The state of Vermont has joined New Jersey, Alabama, and Texas in scrutinizing crypto lender BlockFi’s interest-bearing accounts.

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A statement on BlockFi’s website confirmed that securities regulators in Vermont had issued orders regarding the status and legality of BlockFi Interest Accounts (BIAs). Following suit with authorities in Alabama and Texas. At the time of press, the specific nature and content of Vermont’s order was yet to be revealed.

Their complaint came shortly after a cease and desist order that New Jersey authorities issued on July 19. An order that will prohibit BlockFi from creating new BIA accounts worldwide.

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The New Jersey Bureau of Securities (NJ BOS) found that BIAs were unregistered securities. As such, they have begun investigations into whether or not the company has violated local securities laws. Acting Attorney General Andrew J. Bruck asserted that the regulator would be monitoring BlockFi closely at the time of the initial order.

Furthermore, the NJ BOS extended the effective date of its order until July 29. The company’s statement said this postponement will allow them to consider its position and to submit information. It will also enable them to address any technical issues the cease and desist order may cause.

Regulators in Alabama made a similar allegation the following day. Meanwhile, on July 22, the Texas State Security Board petitioned a hearing with BlockFi, scheduled to take place on October 13.

According to the official notice, the hearing will determine whether or not the state regulator can file a cease and desist order against BlockFi for its alleged securities laws violations. The notice also indicates that the regulator’s enforcement division notified BlockFi about offering securities “that may not comply with the Securities Act” back in April.

The CEO’s response

BlockFi CEO and co-founder Zac Prince issued a response following the NJ BOS’s initial complaint. He took to Twitter on July 21 to share a thread defending his company’s BIA product.

Beginning his thread, he maintained that the BIA was “lawful and appropriate for crypto market participants.”

“We remain firm in our belief that the BlockFi Interest Account is not a security,” Prince went on. “We will continue to engage with all relevant authorities to protect our clients’ interests and expand accessibility to innovative financial solutions for all.”

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Dale Hurst is a journalist, presenter, and novelist. Before joining the Be In Crypto team, he was an editor and senior journalist at a news, lifestyle and human-interest magazine in the UK. Cryptocurrency was one of the first subjects he specialized in when first going freelance in 2018, reviewing exchanges and analysing lawsuits.

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