The U.S. Securities and Exchange Commission (SEC) has decided to allow bankrupt crypto lender BlockFi to prioritize its creditors over its civil penalties.
BlockFi owes the SEC a $30 million fine stemming from 2022 charges, but the regulator agreed to scrap the penalty until the company can pay off the parties who lost money when it went bankrupt, according to a newly filed court document.
Back in February 2022, BlockFi agreed to pay a $50 million penalty to the SEC for failing to register the offers and sales of its retail crypto lending product, as well as violating the registration provisions of the Investment Company Act of 1940, according to a press release from the regulator. The crypto lender also agreed to pay a separate $50 million worth of fines to 32 states to settle similar charges.
The $30 million penalty discussed in the document filed this week was the balance on that $50 million fine directly from the SEC.
In November, BlockFiannounced it would stop allowing customers to withdraw their funds as uncertainties swirled regarding the status of crypto exchange FTX and its trading arm Alameda Research.
The crypto lender announced its voluntary Chapter 11 filing later that month, naming the collapse of FTX as the primary cause.
Generated Image: Midjourney