SEC Waives BlockFi $30 Million Fine Until Investors Get Refund

Key Points:

• The SEC has agreed to waive a $30 million fine for bankrupt platform BlockFi to speed up investor returns.
• This amount is the remainder of the $50 million penalty the platform owes the SEC following an alleged failure to register the loan product with the regulator.
• Before that, the SEC was on the first list of creditors likely to receive an early payment.

The SEC has agreed to forgo the payment owed as part of the settlement of fees to BlockFi, to maximize and speed up payments to investors.

According to court documents, the U.S. Securities and Exchange Commission (SEC) has agreed to waive a $30 million fine for BlockFi. This crypto lending platform has filed for bankruptcy until investors are reimbursed.

The payment is the remainder of a $50 million fine that the crypto lending platform owes the SEC to settle allegations that it failed to register with the authorities that regulate the offering and sale of crypto assets-cryptocurrency lending products. BlockFi agreed to a settlement in February 2022 but filed for bankruptcy in November 2022 following the collapse of FTX.

Sasha Hodder, the founder of Hodder Law, a firm specializing in crypto law, has said that the SEC could be one of the first creditors to receive a payment from BlockFi.

The regulator among its claims should be included “general unsecured claims” in the current Chapter 11 bankruptcy proceedings; however, the regulator agreed to forego the payment “in order to maximize the amount that may be distributed to investors and avoid delay in such distribution” according to the agreement reached on June 22.

Previously, crypto lender – which was forced to halt withdrawals following the collapse of the FTX exchange in November 2022 – also said on June 12 that it expected to complete the withdrawal testing needed to allow some customers to start getting their money back this summer.

The company says that the withdrawal process will be done in installments and that eligible people will receive a confirmation email. In the meantime, the company recommends users set up third-party wallets for withdrawals. The platform also said it would perform an interface upgrade before allowing users to withdraw assets.

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