The US Securities and Exchange Commission (SEC) has decided to allow bankrupt cryptocurrency lender BlockFi to give its creditors priority over its civil fines.
BlockFi owes the SEC a $30 million fine stemming from the 2022 charges, but the regulator agreed to drop the fine until the company can pay the parties that lost money when it went bankrupt, according to a newly filed court order. document.
In February 2022, BlockFi agreed to pay a $50 million fine to the SEC for failing to register the offerings and sales of its retail crypto lending product, as well as violating the registration provisions of the Investment Company Act of 1940, according to a press release of the regulator. The crypto lender also agreed to pay $50 million in fines to 32 states to settle similar charges.
The $30 million fine discussed in the document filed this week was the balance of that $50 million fine directly from the SEC.
In November, BlockFi announced it would stop allowing customers to withdraw their funds amid uncertainties surrounding the status of crypto exchange FTX and its Alameda Research trading arm.
The crypto lender announced the voluntary Chapter 11 filing later that month, citing FTX’s collapse as the primary cause.
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