The New Jersey Bureau of Securities has imposed a cease and desist order to BlockFi, banning it from enrolling new interest account customers in the state.
Zack Prince, BlockFi’s CEO, stated on July 20 that the business had received a notice from the New Jersey Bureau of Securities directing it to halt onboarding BlockFi Interest Account (BIA) clients located in the state beginning July 22.
This lawsuit, if signed, would be the first of its nature against crypto lending platforms, which have experienced tremendous expansion during the current crypto bull run. BlockFi has raised $500 million in private investment since its launch in 2017 and is valued at $5 billion.
The announcement comes around a month after Prince suggested that upcoming crypto rules will benefit the sector.
The decision comes as authorities worldwide appear to be adopting a more aggressive stance against unregulated sections of the cryptocurrency business.
According to the confidential draft, BlockFi has supported and enabled its cryptocurrency borrowing and exchange operations, at least in part, through the sale of unregistered securities, in breach of relevant securities regulations.
In addition to a trading platform and a Bitcoin rewards credit card, the New Jersey-based company provides interest rates ranging from 0.25 percent to 8.5 percent depending on the crypto asset and deposit quantity.
In contrast, the FDIC reports that the national average for savings account interest is 0.06 percent, while 10-year treasury notes earn 1.19 percent.