Alabama regulators slam BlockFi with a show-cause notice
Just a few days after New Jersey regulators issued a Cease and Desist order to BlockFi, stopping it from issuing new accounts in the region, the decentralized crypto lending platform has been hit by another regulatory hurdle from the Alabama Securities Commission (ASC).
The Commission is looking to stop the sales of cryptocurrencies within the state. Meanwhile, BlockFi has acknowledged the receipt of the order and also clarified its stance via a tweet
[1/1]We are aware of the show cause order issued by the Alabama Securities Commission. We have active dialogues with regulators worldwide, including those in Alabama, to share details about our products, which we believe are lawful and appropriate for crypto market participants.
— BlockFi (@BlockFi) July 21, 2021
For clarity, the New Jersey-based crypto exchange platform sells cryptocurrency accounts known as “BlockFi Interest Accounts (BIAs)” that can accrue interests over time. BlockFi has raised at least $14.7 billion through sales of its BIAs, and according to ASC, these sales could be considered as “unregistered securities in violation of the Securities Law.”
The show-cause order accused BlockFi of posing as a U.S.-regulated entity; whereas it has not registered with the ASC or any other security watchdog.
ASC Director Joseph Borg stated that there are already several bodies registered with the ASC to offer security services to the clients in the state as the law requires, but BlockFi isn’t one of them.
The order demands BlockFi to clarify “why they should not be directed to cease and desist from selling unregistered securities in Alabama.”
BlockFi, in another tweet, defended itself by reiterating that its BIA is not a security.
[2/2] Our stance hasn't changed - the BlockFI Interest Account is not a security.
— BlockFi (@BlockFi) July 21, 2021