As a seasoned analyst with years of experience navigating the complexities of the financial industry, I find the California Department of Financial Protection and Innovation’s decision to permanently revoke BlockFi’s license two years after bankruptcy a prudent one. The company’s repeated violations of the California Financing Law (CFL) demonstrated a blatant disregard for consumer protection regulations.
Two years following its bankruptcy, the California Department of Financial Protection and Innovation (DFPI) has made a permanent decision to rescind BlockFi’s operating license.
As a data analyst, I’m sharing the latest development: On November 7th, the California Department of Financial Protection and Innovation (DFPI) announced that they have permanently revoked BlockFi’s license following a thorough review by their regulatory body. This decision comes after an initial suspension of BlockFi’s license in November 2022.
According to the DFPI, BlockFi has agreed to a settlement which involves the withdrawal of their license, halting any further violations, and discontinuing any potentially hazardous activities.
BlockFi breached license conditions
Two years ago, the DFPI initially suspended BlockFi’s license. However, upon further investigation and discovery of violations against the California Financing Law (CFL), they ultimately chose to permanently rescind the license.
BlockFi breached the Consumer Financial Law by neglecting to assess a borrower’s capacity to repay loans, collecting interest prior to loan disbursement, failing to offer credit advice to consumers, and not reporting loan repayment history to credit agencies. The now-bankrupt cryptocurrency lending platform demonstrated these shortcomings.
The California regulatory body pointed out that BlockFi neglected to clearly show the true annual interest rates in their loan documentation.
DFPI Commissioner Clothilde Hewlett stated:
“While we encourage innovation in our financial marketplace, companies must comply with laws and protect consumers to continue operating in California.”
According to the agreed-upon terms, the Department of Financial Protection and Innovation (DFPI) imposed a penalty of $175,000 on BlockFi for violations related to its Consumer Finance Licenses (CFL). However, this fine was not required to be paid as it was waived in favor of prioritizing consumer repayments. This leniency is due to the fact that the company is currently under bankruptcy proceedings and has ceased operations.
BlockFi shut down its web platform in May 2024
As a crypto investor, I recently learned that BlockFi’s operating license has been revoked in California, just a few months after they halted their web platform back in May 2024. Since then, I, along with other clients, have found myself unable to access the BlockFi platform, which has left us uncertain about our investments and future returns.
The financial struggles of BlockFi commenced following the fall of Sam Bankman-Fried’s FTX in November 2022, as both entities held substantial connections with one another.
In the filing for bankruptcy protection made in November 2022, BlockFi admitted to having substantial ties to FTX and its related companies. Specifically, they extended a $400 million line of credit to FTX US back in July 2022. Notably, FTX US is among BlockFi’s largest unsecured creditors, with an outstanding loan of approximately $275 million, as reported by Bloomberg.
As a financial analyst, I can share that by July 2024, I had initiated the first installments of cryptocurrency distributions from BlockFi, following an agreement made with the estates of FTX and Alameda Research back in March 2024, totaling $875 million. These distributions were facilitated via the Coinbase digital asset exchange platform.
As a crypto investor, I found myself grappling with some concerning news about BlockFi in April 2023. The potential total liabilities of this platform were projected to vary significantly, ranging from an astronomical $10 billion to over 100,000 creditors. This revelation left many of us in the crypto community wondering about the future of our investments with BlockFi.
Read More
- LDO PREDICTION. LDO cryptocurrency
- ZK PREDICTION. ZK cryptocurrency
- BTC PREDICTION. BTC cryptocurrency
- CYBER PREDICTION. CYBER cryptocurrency
- ETH PREDICTION. ETH cryptocurrency
- SHIB PREDICTION. SHIB cryptocurrency
- JASMY PREDICTION. JASMY cryptocurrency
- BCH PREDICTION. BCH cryptocurrency
- DYM PREDICTION. DYM cryptocurrency
- RUNE PREDICTION. RUNE cryptocurrency
2024-11-08 13:07