3 states have cracked down on crypto lender BlockFi as the company’s interest accounts draw scrutiny

In this photo illustration the cryptocurrency exchange trading platform Blockfi logo seen displayed on a smartphone with a flag of the United States in the background.

Three US states have said the cryptocurrency platform BlockFi may have violated securities law by offering its interest-bearing accounts within their jurisdictions.

All three states – New Jersey, Alabama, and Texas – said the cryptocurrency platform did not register its BlockFi Interest Accounts, or BIAs, with state regulators and that they may be unregistered securities offerings.

BIA allows clients to deposit their cryptocurrencies and earn interest, depending on how much and which types of assets are deposited.

On July 20, New Jersey issued a summary cease-and-desist order banning BlockFi from selling unregistered securities through its BIAs and accepting new BIAs in the state. The state said this product violated the state’s securities law.

BlockFi CEO Zac Prince in a tweet said that New Jersey, where his firm is headquartered, gave the company an extension and moved the date the ban would take effect to July 29.

The next day, Alabama alleged BlockFi was selling unregistered securities to partly fund crypto lending.

On July 22, Texas scheduled a hearing for October 13 to determine whether it would issue a cease-and-desist order against BlockFi. The state said it notified the cryptocurrency platform as early as April that the company may be in violation of state securities regulations.

Prince has maintained that BIAs are lawful.