An extension to a New Jersey cease-and-desist order for new interest accounts at crypto lender BlockFi will take effect on December 1, according to a statement released by the company on Wednesday.
According to BlockFi, the New Jersey Bureau of Securities has approved the third extension of its cease-and-desist order, marking the third time the agency has done so.
This was the first in a series of orders issued by state securities regulators against the New Jersey-based company in connection with its offerings, and it was initially issued back in July. In the absence of support from the FDIC, the interest accounts offered by BlockFi fall under the definition of a security, claim the authorities.
“The order, which calls for preventing the creation of all new [BlockFi Interest Accounts], is not presently in effect and therefore has no impact on our current BIA clients or any of our other products. All existing BIA clients, in New Jersey and worldwide, continue to have access to their accounts. All other products, services and assets on the BlockFi platform are unaffected,” the firm said Wednesday.
As a result, the issue of cryptocurrency lending and interest accounts has grown exponentially. Similar legal actions against BlockFi competitor Celsius have recently been initiated in New Jersey, Texas, and Alabama.
Federal regulators have been less active, but contacts between the SEC and cryptocurrency exchange Coinbase appear to have put a halt to the latter’s nascent Lend service, which would have paid interest on USDC holdings if they had been taken advantage of.