The US Securities and Exchange Commission (SEC) has made it clear that self-reporting of securities law violations will not give a free pass to unregistered cryptocurrency lending platforms, SEC enforcement director Gurbir Grewal told news agency Reuters.
Comments from the enforcement director came after the financial regulator agreed to settle BlockFi’s case with a $100 million fine in Penalties. BlockFi is a cryptocurrency platform that offers users to buy and sell crypto assets, along with several financial services such as interest-earning accounts, portfolio-backed loans, and fee-free trading.
However, SEC later filed an action against BlockFi for offering a high-yielding account where users are given interest by depositing cryptocurrencies. The financial regulator pointed out that this product is similar to offering security, thereby claiming that BlockFi’s product is offering unregistered securities.
Meanwhile, Grewal has made it clear that other companies with similar products should not expect the SEC to launch a bailout program for firms that self-report violations.
“Our message to them is not, ‘Register your product and we’ll just ignore the billions you have under management in this crypto lending product and your violations of the securities laws,’” said Grewal in a statement to Reuters. He later added:
“Our message is that we’ll view their conduct more favorably if they come in – such as what the remedies will look like, including penalties, and finding a path to complying with the securities laws. That’s the benefit entities get from self-reporting violations and working with us.”