The commission alleges that BlockFi has funded cryptocurrency lending and proprietary trading at least in part through the sale of unregistered securities.
New Jersey-based BlockFi sells interest-earning cryptocurrency accounts known as BlockFi Interest Accounts [BIAs]. According to the ASC, the company raised a minimum of $14.7 billion through the sale of these BIAs, which could be considered “The sale of unregistered securities in violation of the Securities Law.”
The order required BlockFi to explain “why they should not be directed to cease and desist from selling unregistered securities in Alabama.” According to ASC Director Joseph Borg, there are already several entities registered with the ASC, as required by the law, to sell securities to the people in the state.
He also stated: “Most 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.”
BlockFi, for its part, was quick to confirm receipt of the order, while also clarifying its position on Twitter.
"We are aware of the show cause order issued by the Alabama Securities Commission. We 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."
BlockFi, the crypto company has 28 days to respond to the notice.