BlockFi, one of the most popular crypto investment platforms, has relaunched its crypto yield program for accredited investors in the U.S. after shelving it early this year due to punitive actions from regulators.
In February 2022, BlockFi agreed to pay $100 million to settle lawsuits filed by the U.S. Securities and Exchange Commission (SEC) and 32 U.S. states over its yield-earning crypto accounts. The lawsuits asserted that BlockFi’s yield accounts were securities that the company sold without the required disclosures and permissions.
The lawsuits led BlockFi to block its interest-earning crypto accounts for U.S. investors while it worked to meet regulatory requirements. It appears that the company has achieved that, as it has announced that select accredited investors will get access to interest-earning crypto accounts by the end of 2022 prior to a roll-out to all U.S. accredited investors in 2023.
The upcoming product will offer “competitive interest rates” on 15 digital tokens and have no minimum investment requirement, BlockFi said. Clients must complete an accredited investor verification request to access the service.
The crypto industry has faced tough times this year, and BlockFi wasn’t an exception. The market downturn caused several big crypto investment platforms to go bankrupt, including Celsius and Voyager Digital. BlockFi escaped the carnage after they secured a $400M line of credit from crypto exchange FTX, in July, 2022, with the option to purchase for an additional $240M in the future, much less than the $3 billion valuation it commanded in its heyday.
The terms of the acquisition included FTX US providing a $400 million loan to BlockFi presumably to fulfill its interest obligations to clients and avoid bankruptcy following a crash in crypto prices. The final purchase price was dependent on several performance milestones, including regulatory approval for BlockFi's new interest product that it appears to have secured.
It’s not yet clear how BlockFi’s new yield product will compare to its original interest-earning accounts, particularly the interest rates.
BlockFi remained open to users outside the U.S. after its clash with regulators. The company says it has paid out over $600 million in interest to users since its inception in 2017.
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