Key Takeaways:
- BlockFi settled with California regulators, agreeing to a permanent license revocation and an end to unsafe practices.
- The DFPI’s investigation found BlockFi violated lending laws, including misleading APR disclosures and failing to assess borrowers’ repayment abilities.
- BlockFi faces a $175,000 fine, waived to focus on consumer repayments amid its bankruptcy and halted operations.
BlockFi, a bankrupt crypto lender, has agreed to a settlement with the California Department of Financial Protection and Innovation (DFPI), resulting in the permanent revocation of its lending license and a commitment to halt unsafe practices.
The DFPI’s action follows a November 2022 investigation that initially suspended BlockFi’s license due to violations of the California Financing Law (CFL).
Today, we’re announcing we’ve revoked crypto lender BlockFi’s California Financing Law (CFL) license. BlockFi has agreed to a settlement that includes a revocation of its license and a cease-and-desist from harmful practices. More: https://t.co/gdi28TpY7H pic.twitter.com/S1uieLHbkP
— CA Department of Financial Protection & Innovation (@CaliforniaDFPI) November 8, 2024
The DFPI’s review found that BlockFi failed to assess borrowers’ ability to repay, charged interest before disbursing loans, and did not provide credit counseling or report payment histories.
The lender also allegedly misrepresented loan terms. DFPI Commissioner Clothilde Hewlett emphasized the need for compliance with consumer protection laws.
BlockFi was fined $175,000, which was waived to prioritize consumer repayments given the company’s bankruptcy.
This decision came after BlockFi closed its platform in May 2024, ending client access.
BlockFi’s financial struggles began with the collapse of FTX in 2022, with which it had substantial financial ties, including a $400 million credit line and $275 million owed by FTX US.
BlockFi continues to owe significant sums to creditors, with an estimated $10 billion in liabilities to over 100,000 creditors as of April 2023.
About The Author
Adam Morris, the co-founder of Crypto Head and a respected crypto expert, offers insightful commentary and analysis on cryptocurrency, NFTs, and the evolving digital landscape.
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