Summary Review: Two years after BlockFi’s bankruptcy, California’s financial regulator has permanently revoked the crypto lender’s license, citing violations of lending laws and unsafe practices. The settlement requires BlockFi to stop such practices and includes a fine, though repayment to creditors is prioritized.
The California Department of Financial Protection and Innovation (DFPI) has permanently revoked the lending license of bankrupt cryptocurrency lender BlockFi, which ceased operations two years ago. On Nov. 7, the DFPI announced that the revocation follows its previous suspension of BlockFi’s license in November 2022.
BlockFi agreed to the revocation in a settlement, promising to halt any further violations and stop practices deemed unsafe. The DFPI’s examination found that BlockFi breached the California Financing Law by not assessing borrowers’ repayment ability, charging interest before loans were disbursed, and failing to provide credit counseling or report to credit bureaus. Additionally, BlockFi did not accurately disclose annual percentage rates in loan agreements.
DFPI Commissioner Clothilde Hewlett emphasized the importance of compliance, stating, “We encourage financial innovation, but companies must follow laws and protect consumers to operate in California.” The settlement includes a $175,000 fine for BlockFi’s regulatory violations, though the DFPI prioritized returning funds to BlockFi’s creditors due to the company’s bankruptcy status.
BlockFi shut down its web platform in May 2024, further limiting access for its clients. The company’s bankruptcy troubles began after the collapse of Sam Bankman-Fried’s FTX in November 2022, to which BlockFi had substantial financial exposure, including a $400 million credit line and a $275 million loan to FTX US, one of its largest unsecured creditors.
Summary Review: Two years after BlockFi’s bankruptcy, California’s financial regulator has permanently revoked the crypto lender’s license, citing violations of lending laws and unsafe practices. The settlement requires BlockFi to stop such practices and includes a fine, though repayment to creditors is prioritized.
Disclaimer: Nothing in this article, or any content from Web30 News, should be interpreted as financial advice. The information provided is for entertainment and educational purposes only. Investing in cryptocurrency involves risks, and investors should be aware that capital is at risk and returns are never guaranteed. Please conduct thorough research and consult with a qualified financial advisor before making any investment decision.
