U.S. SEC Allows Bankrupt Crypto Lender BlockFi to Prioritize Creditors over Fines.
In a recent court filing, the U.S. Securities and Exchange Commission (SEC) has made a significant decision regarding BlockFi, a crypto lender facing bankruptcy. The SEC has agreed to waive a $30 million fine imposed on BlockFi until the company fulfills its obligations to the parties who suffered financial losses during its bankruptcy proceedings.
This development stems from charges brought against BlockFi in 2022. Initially, the company had agreed to pay a $50 million penalty to the SEC for non-compliance with registration requirements related to its retail crypto lending product. Additionally, BlockFi had settled similar charges by agreeing to pay fines worth $50 million to 32 states.
However, the recent court document states that the $30 million discussed represents the remaining balance of the $50 million fine specifically from the SEC.
In November, BlockFi made an announcement that created concerns among its customers. The company stated that it would temporarily halt fund withdrawals due to uncertainties surrounding the status of crypto exchange FTX and its trading arm Alameda Research.
Consequently, BlockFi voluntarily filed for Chapter 11 bankruptcy later that month, citing the collapse of FTX as the primary cause.
By allowing BlockFi to prioritize its creditors over the fines, the SEC’s decision enables the company to address the financial losses suffered by affected parties before settling its outstanding penalties. This arrangement seeks to provide a fair resolution while balancing the interests of all stakeholders involved.
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.