SEC probes BlockFi as regulator mounts investigations across dozens of crypto firms, report says

• The SEC is probing BlockFi over its high-yield, interest-bearing accounts, Bloomberg reported.
• The agency is set to determine whether BlockFi accounts are similar to securities.
• The SEC has also sought information from dozens of other crypto firms in recent months, according to Bloomberg.

The US Securities and Exchange Commission is probing cryptocurrency lending platform BlockFi over its high-yield, interest-bearing accounts, Bloomberg first reported Wednesday.

The New Jersey-based firm has grown in popularity with such products. It offers accounts that let users earn annual yields as high as 9.5%, according to its website. In contrast, traditional savings accounts let holders earn a mere 0.06% annually. But unlike bank deposits, digital-asset savings accounts are not insured by the federal government.

Sources told Bloomberg that this is the heart of the SEC's investigation: to determine whether BlockFi accounts are similar to securities. If so, these products must then be registered with the agency.

The SEC has not accused BlockFi of any wrongdoing thus far.

Still, this isn't BlockFi's first brush with authorities. Multiple states have clamped down on the crypto lending platform for potentially violating securities laws with its high-yield accounts.

New Jersey, Alabama, and Texas in July said the platform did not register its BlockFi Interest Accounts, or BIAs, with state regulators and that they may be unregistered securities offerings.

BlockFi, a private company valued at more than $4 billion with over 500,000 retail accounts, offers a range of products to consumers. It has been backed by investors like Bain Capital and Tiger Global Management since its founding in 2017.

The scrutiny over BlockFi comes in step with the regulator's growing oversight attempts. In recent months, the SEC has sent subpoenas and requests for information to dozens of crypto firms, sources told Bloomberg.

Under the leadership of Chair Gary Gensler, the agency has been tightening the reins on the digital asset space. Its latest high-profile crackdown involved Coinbase Global in September.

After threatening to sue the largest US crypto exchange over a planned lending program, Coinbase quickly abandoned the initiative. It was supposed to offer 4% interest on crypto holdings by lending out tokens.