The agency agreed to defer its claim against the crypto lender BlockFi to ensure investors are repaid in full without delay.
According to a court filing dated June 22, the U.S. Securities and Exchange Commission (SEC) has decided to delay collecting a $30.2 million fine from defunct crypto lender BlockFi.
The move comes as part of an agreement between the SEC and BlockFi, where the agency recognized that the repayment of investors should be prioritized over the fine settlement.
BlockFi’s Legal Woes
In February 2022, BlockFi, a platform offering interest-bearing accounts and cryptocurrencies loans, agreed to pay a fine of $50 million to the SEC for failing to register its lending product.
The lender also agreed to pay another $50 million in penalties to resolve similar charges in 32 states.
However, BlockFi filed for bankruptcy in November 2022, shortly after the collapse of FTX and its sister firm Alameda Research, which were major backers of BlockFi.
At the time of bankruptcy, the platform still owed $30.2 million of the $50 million it had agreed to pay the SEC.
SEC’s Generous Gesture
In the court filing, the SEC noted that its penalty claim against BlockFi falls under “general unsecured claims.” Therefore, the agency is entitled to participate in the recovery of dues alongside other unsecured creditors.
However, “in order to maximize the amount that may be distributed to investors and avoid delay in such distribution,” the SEC will forego its claim until all BlockFi users are paid back in full.
Securities and Exchange CommissionIn March, BlockFi was granted permission to repay over $100,000 to certain users in California. Last month, a bankruptcy court ruled that BlockFi can return the nearly $300 million sitting in its custodial wallets to users.
In addition, the court ruled that the $375 million that users tried to move out of the accounts around the time of the bankruptcy filing belonged to the estate.
