BlockFI ordered to stop onboarding New Jersey-based customers

Published at: July 20, 2021

The New Jersey Bureau of Securities had issued a cease and desist order to centralized crypto lending firm, BlockFi, preventing it from onboarding new interest account clients in the state.

The news was first broken by Forbes on July 19, with the outlet citing an undated, unpublished draft press release which revealed that the New Jersey Bureau of Securities was planning to issue a Summary Cease and Desist order to BlockFi.

The draft reportedly accuses BlockFi of offering unregistered securities to its customers. The document purported to quote Acting Attorney General Andrew J. Bruck as stating:

“Our rules are simple: if you sell securities in New Jersey, you need to comply with New Jersey’s securities laws. No one gets a free pass simply because they’re operating in the fast-evolving cryptocurrency market.”

On July 20, Zack Prince, BlockFi’s CEO, confirmed the firm had received an order from the New Jersey Bureau of Securities ordering it to stop onboarding BlockFi Interest Account (BIA) clients residing in the state from July 22.

“BlockFi is engaged in an ongoing dialogue with regulators to help them understand our products, which we believe are lawful and appropriate for crypto market participants,” Prince said, adding:

“BIA is not a security, and we therefore disagree with the action by the New Jersey Bureau of Securities.”

Related: BlockFi starts shipping Visa-backed Bitcoin rewards credit cards

The news comes roughly one month after Prince stated that impending regulations on crypto would be favourable for the industry.

The order comes as regulators around the world appear to be taking increasing action against unregulated sectors within the crypto industry.

Cointelegraph reported earlier today that United States Treasury Secretary Janet Yellen has urged lawmakers to quickly establish stablecoin regulations.

Binance has also come under fire for allegedly operating without proper licensing with the U.K Financial Conduct Authority accusing its subsidiary, Binance Markets Limited (BML), of providing unlicensed services to in the United Kingdom.

In China, regulators have also clamped down on local Bitcoin mining operations, which saw the Bitcoin network hash rate plummet by 54% since May 29.

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