Kentucky instructs BlockFi to cease the registration of new Interest Accounts

TL;DR Breakdown

• Kentucky is the newest member of the United States recognizing BlockFi Interest Accounts as a violation.
• BlockFi Interest Accounts have been stopped from gathering new users by Kentucky, making it the 5th state in line.
• BlockFi immediately complied with the request of Kentucky’s Division of Securities, ceasing new registrations.

Kentucky became one of the five states that have considered that BlockFi’s feature wherein it allowed the users to borrow or lend any sum of crypto as a violation of the state’s laws. As a result, the members of the Division of Securities have instructed the organization to cease operations.

The instructions do not forbid the organization to put a stop to the currently operational accounts but have forbidden BlockFi to register new users to Interest Accounts. This means that the firm won’t be accepting new applications for the Interest Accounts registrations.

Interest Accounts violated laws

According to the announcement by the Division of Securities, the BlockFi Interest Accounts have breached security laws while providing the services of lending and borrowing. To these allegations, BlockFi has acceded to the requests of the authorities.

The problem with these accounts stemmed from the fact that if a person was depositing cryptocurrencies, the firm earned money from the crypto being deposited.

BlockFi seeks Series E funding

Although these regulations from about five states have got the company pinned down, BlockFi has still been in the pursuit of Series E funding from various institutional investors as there is a possibility that the organization might be holding a public offering in the near future.

The Series E round was supposed to end this week, but as of now, it is not public whether the firm has been able to gather funding or not. The regulations on cryptocurrencies and exchanges have tightened, which is considered a positive sign.

An update on regulatory conversations: pic.twitter.com/0TYqSfBk4i

— BlockFi (@BlockFi) July 28, 2021