After Blockfi’s problem with the New Jersey Securities Bureau, the company is now experiencing problems in Alabama. Joseph Borg, director of the Alabama Securities Commission (ASC), explained on July 21 that he issued a presentation to the company. Borg hopes that Blockfi should explain why ASC should not replicate the New Jersey stop and stop, because Alabama regulators also seem to believe they may sell unregistered securities. For the same reason, Blockfi received another order from the Texas Securities (TSS) Commission.
Alabama Securities Commission’s Show Cause order requires Blockfi accounts to have unregistered securities, Texas joins the crackdown
- Joseph Borg, director of the Alabama Securities Commission (ASC), told the media on July 21 that Blockfi had received a formal order to perform. The show cause order is different from the stop and stop issued by New Jersey to Blockfi because it gives the company the opportunity to explain whether the order is reasonable.
- A press release issued by ASC director Joseph Borg emphasized that the reason for the performance order requires Blockfi to explain “why they should not be instructed to stop and stop selling unregistered securities in Alabama.”
- “As required by law, there are thousands of entities registered with the ASC to sell securities to the people of Alabama,” ASC director Borg said in a press release. “Most people who register to sell securities live outside of Alabama, but anyone offering securities must register before offering an investment offer to Alabama residents,” he added.
- Blockfi has responded to these allegations and the order for the reasons for the show. “We are aware of the program cause order issued by the Alabama Securities Commission,” the official Blockfi Twitter account detail“We have engaged in active dialogues with regulators around the world, including those in Alabama, to share detailed information about our products, which we believe are legal and appropriate for crypto market participants.”
- “Our position has not changed-Blockfi interest accounts are not securities,” the company further stated emphasize.
- The two orders from Alabama and New Jersey seem to indicate that the regulator considers the Blockfi interest-bearing account to be an unregistered securities issue. The two countries also emphasized that active regulatory actions are aimed at protecting retail investors.
- Following Alabama’s performance order, Texas became the third state to join the crackdown on Blockfi’s interest-bearing account product (BIA). The Texas Securities (TSS) Commission issued the order on Thursday, explaining that Blockfi’s products are not protected by the Securities Investor Protection Corporation (SIPC).
- “BIA is not protected by the Securities Investor Protection Corporation (also known as SIPC), which is a federally authorized, non-profit, member-funded U.S. company created under the Securities Investor Protection Act of 1970. Most brokers registered in the United States are required to become member-distributors,” the TSS order stated.
- “If the investment is related to cryptocurrency, blockchain technology or a certain type of digital asset, if it constitutes an investment contract, bill, debt evidence, or other types of securities, this fact does not remove it from securities supervision. “TSS order added. “According to the information and allegations described in this article, BIA constitutes investment contracts, bills or debt evidence, as securities supervision, and this term is defined by Article 4.A of the Securities Law.”
- Juthica Chou, Kraken’s head of over-the-counter options trading, asked why securities regulators were so aggressive. “Did the national securities regulators have been so aggressive or did they just find such easy and opportunistic targets in Robinhood and Blockfi,” Zhou Tweet.
- Blockfi also emphasized on July 19 that Blockfi interest accounts (BIA) are not securities after the suspension and suspension order in New Jersey. “BIA is not a security, so we do not agree with the actions of the New Jersey Securities Bureau,” the company said Say then.
- “ASC’s actions come at a time when people are increasingly concerned about the proliferation of decentralized financial platforms such as Blockfi, which seek to reshape traditional financial systems such as banks and brokers for digital asset investors,” the ASC press release details.
- “The Show Cause order claims that although Blockfi advertises on its website that Blockfi is a’U.S. regulated entity’, Blockfi has failed to disclose to investors that its BIA is not registered with the ASC or any other securities regulator,” ASC statement Concluded.
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