Even though Iowa’s regulator gave BlockFi a big fine just two weeks ago, the company now has a license in the state.
BlockFi, a crypto lending platform, stated on June 28 that it has earned a Money Services License in Iowa, just two weeks after being fined by Iowa regulators for marketing and selling unregistered securities.
The Iowa license will allow the cryptocurrency lender to receive funds and sell payment instruments in the state. On Twitter, BlockFi claimed that it will begin by allowing Iowa residents to trade stablecoins.
Previously, on June 14, the Iowa Insurance Division (IID), which is in charge of securities transactions in the state, penalized BlockFi more than $943,000 for violations of the state’s Securities Act. BlockFi was accused of “offering and selling securities in Iowa that were not registered or permitted for sale in Iowa,” as well as failing to register as a broker-dealer or agent.
The fine was part of a bigger penalty imposed by the Securities and Exchange Commission (SEC) in February for failing to register an offering of high-yield interest accounts that the SEC regarded to be securities.
The fine was one of the biggest ever issued by a federal regulator on a cryptocurrency company.
BlockFi was fined $100 million in settlements, half of which was paid to the SEC and the other half to 32 states that pursued identical accusations.
Shortly after, BlockFi announced its intention to register with the SEC for a crypto interest-bearing security for its US consumers to replace its present interest accounts offering.
The new license offers a ray of hope for BlockFi, which has suffered alongside other blockchain and crypto startups as market conditions deteriorate and crypto values decline.
On June 16, BlockFi was among the lending firms forced to liquidate some of Three Arrow Capital (3ACpositions )’s after the latter failed to meet a margin call on its Bitcoin (BTC) borrowings.
Celsius, a competitor crypto loan company, halted customer withdrawals on June 13, citing market conditions as the reason. Other claims followed, claiming that the corporation was experiencing cash problems and would soon be bankrupt.
These conditions have also resulted in a round of layoffs from blockchain and crypto startups, with BlockFi CEO Zac Prince announcing on June 14 that the company would be laying off 20% of its workforce in order to remain profitable. It’s unclear how much influence the SEC’s monetary fines had on the decision.
A week later, on June 21, BlockFi received a lifeline from crypto exchange FTX, which saw BlockFi sign a $250 million revolving credit facility arrangement to boost the firm’s balance sheets and platform.
Days later, it was reported that FTX was in talks to buy a stake in BlockFi, but a BlockFi spokesperson said that the company “does not comment on market rumors” and is “still negotiating the terms of the deal,” and shareholders are reportedly unhappy with the move because it would wipe out shareholder equity.
According to recent reports, Anthony Pompliano’s investment firm Morgan Creek is attempting to put together a $250 million agreement to acquire a majority stake in the company.
