SEC waives BlockFi’s $30M fine until creditors are paid

The United States Securities and Exchange Commission (SEC) has agreed to postpone paying a $30 million fine from bankrupt crypto lender BlockFi until creditors are paid. The amount represents the balance of a $50 million agreement with the regulator beginning in February 2022.

According Following the June 22 court filings, the SEC will waive the amount owed by BlockFi to "maximize" and avoid delays in distributing funds to investors "until payment in full of all other Allowable Claims." The document stated: "The Commission has agreed to waive participation in any distributions under the Plan or to require any cash reserves in connection with such distributions."

In February 2022, the SEC Announced action against crypto lending company for failing to register its high-yield interest accounts as securities. BlockFi agreed to pay $50 million to the regulator as part of the settlement and another $50 million to 32 US states that filed similar complaints.

According to court documents, the SEC headed the list of BlockFi's creditors, along with West Realm Shires Services Inc. (dba FTX US). FiBlock filed for Chapter 11 bankruptcy protection in late November after the FTX crisis raised questions about its financial health. According to its bankruptcy filing, BlockFi had $256.9 million in liquidity at the time.

On May 11, a federal judge BlockFi permission granted to return $297 million to customers with held deposits in its Wallet program. The rebate did not apply to users of BlockFi Interest Accounts (BIAs) that were used in their lending business and are owned by the bankrupt masses. BlockFi's BIA accounts have more than $375 million.

BlockFi too refund more than $100,000 to California customers who continued to repay the loans even after the company halted operations on November 10 last year. An investigation by the California Department of Financial Protection and Innovation found that at least 111 borrowers in the state made approximately $103,471 in loan repayments after filing for bankruptcy.

Magazine: Bitcoin 2023 in Miami takes on 'shitcoins on Bitcoin'