Troubled crypto lender BlockFi got a major relief after the SEC agreed to spare the $30 million penalty it owed to the commission.
The amount is the remainder of the $50 million fine that must be paid to the SEC for failing to register with the regulator for the offering and sale of its crypto lending product.
According to the court filing, the decision to relinquish the payment was taken “to maximize the amount that may be distributed to investors and avoid delay in such distribution.”
In the agreement reached on June 22, SEC also argued that its claims ought to be included in the category of “general unsecured claims” in the ongoing Chapter 11 bankruptcy proceedings.
As part of its settlement with the SEC and other state regulators in February 2022, BlockFi owed a total of $100 million.
Previously TronWeekly reported on BlockFi’s settlement terms which included paying a $50 million fine to the SEC and another $50 million to various states.
The penalties of this magnitude were considered some of the harshest ever imposed on a crypto firm that also came in the backdrop of a U.S. clampdown on the industry.
The SEC and various state investigators ramped up their scrutiny on several companies, including Celsius Network and Gemini Trust Co. that gained immense popularity with retail investors for paying yields sometimes exceeding 10%.
Crypto-lenders, in particular, were under the prying eyes of the regulators then as they attracted several billions of dollars in deposits by promising yields much higher than those available through traditional savings accounts.
The lending platform’s other accusations included illegally offering a product that promises customers high-interest rates to lend out their digital assets.
BlockFi Vs FTX
Following FTX’s implosion, the crypto lender filed for bankruptcy in November. An urgent loan offered to the fallen exchange on July 1 might have expedited BlockFi’s sharp decrease in value.
With that financing, FTX was given the option to purchase BlockFi for $240 million, thereby establishing a cap on the value of the company’s shares.
In days that followed, the relationship between the two firms soured after a disagreement arose over $465 million worth of shares of online broker Robinhood Markets Inc. that BlockFi had pledged as security for an outstanding obligation owing to it by FTX affiliate Alameda Research.