{"id":58299,"date":"2021-07-23T09:01:42","date_gmt":"2021-07-23T09:01:42","guid":{"rendered":"https:\/\/www.cryptocabaret.com\/?p=58299"},"modified":"2021-07-23T09:01:42","modified_gmt":"2021-07-23T09:01:42","slug":"texas-and-alabama-regulators-crackdown-on-blockfis-interest-bearing-account-product","status":"publish","type":"post","link":"https:\/\/www.cryptocabaret.com\/?p=58299","title":{"rendered":"Texas and Alabama Regulators Crackdown on Blockfi\u2019s Interest Bearing Account Product"},"content":{"rendered":"<p><img decoding=\"async\" width=\"768\" height=\"432\" src=\"https:\/\/www.cryptocabaret.com\/wp-content\/uploads\/2021\/07\/txala-768x432.jpg\" class=\"attachment-medium_large size-medium_large wp-post-image\" alt=\"Texas and Alabama Regulators Crackdown on Blockfi's Interest Bearing Account Product\" loading=\"lazy\" srcset=\"https:\/\/www.cryptocabaret.com\/wp-content\/uploads\/2021\/07\/txala-768x432.jpg 768w, https:\/\/static.news.bitcoin.com\/wp-content\/uploads\/2021\/07\/txala-300x169.jpg 300w, https:\/\/static.news.bitcoin.com\/wp-content\/uploads\/2021\/07\/txala-1024x576.jpg 1024w, https:\/\/static.news.bitcoin.com\/wp-content\/uploads\/2021\/07\/txala-696x385.jpg 696w, https:\/\/static.news.bitcoin.com\/wp-content\/uploads\/2021\/07\/txala-1068x601.jpg 1068w, https:\/\/static.news.bitcoin.com\/wp-content\/uploads\/2021\/07\/txala-747x420.jpg 747w, https:\/\/static.news.bitcoin.com\/wp-content\/uploads\/2021\/07\/txala-190x107.jpg 190w, https:\/\/static.news.bitcoin.com\/wp-content\/uploads\/2021\/07\/txala-380x214.jpg 380w, https:\/\/static.news.bitcoin.com\/wp-content\/uploads\/2021\/07\/txala-760x428.jpg 760w, https:\/\/static.news.bitcoin.com\/wp-content\/uploads\/2021\/07\/txala.jpg 1280w\" sizes=\"auto, (max-width: 768px) 100vw, 768px\"><\/p>\n<p><strong>Fresh off the heels of Blockfi\u2019s issues with the \u200b\u200bNew Jersey Bureau of Securities, the company is now having problems in the state of Alabama. The director of the Alabama Securities Commission (ASC), Joseph Borg, explained on July 21 that he issued a show cause to the firm. Borg wants Blockfi to explain why the ASC should not copy New Jersey\u2019s cease and desist as Alabama regulators also seem to believe they might be selling unregistered securities. Blockfi has received another order from the Texas State Securities (TSS) Board for the same reason. <\/strong><\/p>\n<h2>Alabama Securities Commission\u2019s Show Cause Order Calls Blockfi Accounts Unregistered Securities, Texas Joins the Crackdown<\/h2>\n<ul>\n<li>The director of the Alabama Securities Commission (ASC) Joseph Borg <a href=\"https:\/\/asc.alabama.gov\/news_detail.aspx?ID=15528\">told the press<\/a> on July 21 that Blockfi was sent an official show cause order. A show cause order is different from the cease and desist <a href=\"https:\/\/news.bitcoin.com\/blockfi-ordered-to-stop-offering-interest-bearing-crypto-accounts-in-new-jersey\/\">issued against Blockfi<\/a> in New Jersey, as it gives the firm a chance to explain whether or not the order is justified.<\/li>\n<li>A press release stemming from the ASC\u2019s director Joseph Borg highlights that the show cause order requires Blockfi to explain \u201cwhy they should not be directed to cease and desist from selling unregistered securities in Alabama.\u201d<\/li>\n<li>\u201cThere are thousands of entities registered with the ASC, as required by law, to sell securities to the people of Alabama,\u201d ASC director Borg stated in the press release. \u201cMost of those registered to sell securities live outside of Alabama, but anyone offering securities must be registered before making an investment offer to an Alabama resident,\u201d he added.<\/li>\n<li>Blockfi has responded to the allegations and the show cause order. \u201cWe are aware of the show cause order issued by the Alabama Securities Commission,\u201d the official Blockfi Twitter account <a href=\"https:\/\/twitter.com\/BlockFi\/status\/1417968861308088324?s=20\">details<\/a>. \u201cWe have active dialogues with regulators worldwide, including those in Alabama, to share details about our products, which we believe are lawful and appropriate for crypto market participants.\u201d<\/li>\n<li>\u201cOur stance hasn\u2019t changed \u2013 the Blockfi Interest Account is not a security,\u201d the company further <a href=\"https:\/\/twitter.com\/BlockFi\/status\/1417968862134300672?s=20\">stressed<\/a>.<\/li>\n<li>Both orders stemming from Alabama and New Jersey seem to indicate that regulators believe Blockfi interest-bearing accounts are unregistered securities offerings. The two states also stress that aggressive regulatory actions are meant to protect retail investors.<\/li>\n<li>Following the show cause order from Alabama, Texas has become the third state to join the crackdown on Blockfi\u2019s interest-bearing account product (BIAs). The Texas State Securities (TSS) Board <a href=\"https:\/\/www.ssb.texas.gov\/sites\/default\/files\/files\/news\/Blockfi_NOH_final.pdf\">published the order<\/a> on Thursday explaining Blockfi\u2019s product is not protected by Securities Investor Protection Corporation (SIPC).<\/li>\n<li>\u201cThe BIAs are not protected by Securities Investor Protection Corporation, otherwise known as the SIPC, a federally mandated, non-profit, member-funded United States corporation created under the Securities Investor Protection Act of 1970 that mandates membership of most U.S.-registered broker-dealers,\u201d the TSS order notes.<\/li>\n<li>\u201cThe mere fact an investment is tied to a cryptocurrency, blockchain technology, or some type of digital asset does not remove it from securities regulation if it constitutes an investment contract, note, evidence of indebtedness, or other type of security,\u201d the TSS order adds. \u201cBased on the information and allegations set forth herein, the BIAs constitute investment contracts, notes, or evidences of indebtedness regulated as securities as that term is defined by Section 4.A of the Securities Act.\u201d<\/li>\n<\/ul>\n<p><!-- growjs zone placement 31 --> <ins> <ins class=\"growjs-placement\"><\/ins> <\/ins> <!-- end of growjs zone placement --> <\/p>\n<ul>\n<li>The head of over-the-counter options trading at Kraken, Juthica Chou, asked why securities regulators were being this aggressive. \u201cHave state securities regulators always been this aggressive or are they just finding such easy and opportunistic targets in Robinhood and Blockfi,\u201d Chou <a href=\"https:\/\/twitter.com\/juthica\/status\/1417545057931038723?s=20\">tweeted<\/a>.<\/li>\n<li>Blockfi also stressed on July 19, after the New Jersey cease and desist order, that a Blockfi interest account (BIA) is not a security. \u201cBIA is not a security, and we therefore disagree with the action by the New Jersey Bureau of Securities,\u201d the company <a href=\"https:\/\/twitter.com\/BlockFi\/status\/1417318613262880768?s=20\">said<\/a> at the time.<\/li>\n<li>\u201cThe ASC action comes amid rising concerns over the proliferation of decentralized finance platforms like Blockfi that seek to reinvent traditional financial systems such as banks and brokerages for digital asset investors,\u201d the ASC press release details.<\/li>\n<li>\u201cThe Show Cause Order alleges that, despite advertising on its website that Blockfi is a \u2018U.S. regulated entity\u2019, Blockfi fails to disclose to investors that its BIAs are not registered with the ASC or any other securities regulator,\u201d the ASC\u2019s statement concludes.<\/li>\n<\/ul>\n<p><em><strong>What do you think about Blockfi\u2019s issues with securities regulators? Let us know what you think about this subject in the comments section below. <\/strong><\/em><\/p>\n<p class=\"wpematico_credit\"><small>Powered by <a href=\"http:\/\/www.wpematico.com\" target=\"_blank\" rel=\"noopener\">WPeMatico<\/a><\/small><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Fresh off the heels of Blockfi\u2019s issues with the \u200b\u200bNew Jersey Bureau of Securities, the company is now having problems in the state of Alabama. The director of the Alabama Securities Commission (ASC), Joseph Borg, explained on July 21 that he issued a show cause to the firm. Borg wants Blockfi to explain why the [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":58300,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[309],"tags":[],"class_list":["post-58299","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptocurrency"],"_links":{"self":[{"href":"https:\/\/www.cryptocabaret.com\/index.php?rest_route=\/wp\/v2\/posts\/58299","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.cryptocabaret.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.cryptocabaret.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.cryptocabaret.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.cryptocabaret.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=58299"}],"version-history":[{"count":0,"href":"https:\/\/www.cryptocabaret.com\/index.php?rest_route=\/wp\/v2\/posts\/58299\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.cryptocabaret.com\/index.php?rest_route=\/wp\/v2\/media\/58300"}],"wp:attachment":[{"href":"https:\/\/www.cryptocabaret.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=58299"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.cryptocabaret.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=58299"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.cryptocabaret.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=58299"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}