Texas becomes the third U.S state to launch a crackdown against BlockFi. Even though regulatory authority is coming in, BlockFi’s plan to go legal remain unmoved. The recent crackdown will restrict BlockFi from offering interest account. Texas state regulatory authority declared BlockFi’s interest account product as security, instead of considering it as a commodity. This is the third blow suffered by the company.
The case was filed against BlockFi by the Texas State Securities Board (TSSB). TSSB plead to cease BlockFi Trading and BlockFi Lending. However, BlockFi can carry on operations until the judgment is passed by the Texas State Court. However, BlockFi can legally respond to the argument built against the company.
TSSB’s director of enforcement, Joe Rotunda, said that the company can respond to the allegations made by TSSB. He also shared a copy of the case with CoinDesk. Texas followed the footsteps of Alabama and New Jersey in accusing that crypto platform’s interest accounts violate the state’s regulations regarding the securities.
Texas state department of securities further also claimed that they informed BlockFi in the month of April that the company’s product is a clear violation of its securities rules and regulations and can be a reason for the state to take strict action against BlockFi. However, BlockFi kept offering BIA illegally in Texas.
The report also claimed that BlockFi has approximately 25,000 clients in the state of Texas, the company’s assets worth over $691million. The BlockFi responded to these allegations by saying its interesting accounts don’t fall in the category of securities, rather it falls in the category of commodity. One thing was common between New Jersey and Texas state stances, both of them argued that BlockFi’s customers use the company’s lending platform and put their crypto investments, which allows BlockFi to invest customer’s digital assets. The company’s corporate investments are against state law.
Even though three U.S states have so far moved against BlockFi for violating the securities rules and regulations BlockFi still focused on issuing interest assets on other U.S states. The company also moving forward with its ambitions to get regularized. BlockFi top leadership recently told Coindesk that BlockFi is ready to fight court battles in court rather than using a public platform. Companies will use public platforms for what they think is in the public’s interest. BlockFi just hinted that they don’t agree with the state’s securities regulations.
The company will continue to offer USD loans backed by crypto assets as well. The aim is to continue to provide loans at the interest rate of 4.5%. Apart from that, BlockFi is looking forward to further expand its operations in other states as well.
