SEC will ‘forego’ $30M BlockFi penalty until investors are repaid

BlockFi is set to open customer withdrawals later this summer

article-image

rafapress/Shutterstock modified by Blockworks

share

Bankrupt crypto lender BlockFi has reached an agreement with the SEC. As part of the deal, the company will utilize approximately $30 million in penalties owed to the SEC to prioritize repayment to its investors. The agreement was finalized on Thursday.

“In order to maximize the amount that may be distributed to investors and avoid delay in such distribution, the Commission has agreed to forego participating in any distributions under the Plan or requiring any cash reserve in connection with such distributions, on account of any claims that may be or become Allowed Claims based on the Commission POC until all other allowed claims…are paid in full,” the SEC said in the filing

The SEC initially charged BlockFi a $50 million penalty back in February of last year, claiming that BlockFi sold BlockFi Interest Accounts (BIAs) to the public.

“Through BIAs, investors lent crypto assets to BlockFi in exchange for the company’s promise to provide a variable monthly interest payment,” the SEC said in its press release. 

“The order finds that BIAs are securities under applicable law, and the company therefore was required to register its offers and sales of BIAs but failed to do so or to qualify for an exemption from SEC registration.”

BlockFi is set to open to customer withdrawals later this summer according to emails sent to customers earlier this month.

Loading Tweet..

In early May, a judge ruled that roughly $300 million can be returned to customers who held crypto in custodial accounts, but that the $375 million locked up in interest-bearing accounts will not be returned to the original customers.

Following the collapse of FTX, the crypto lender halted withdrawals before filing for bankruptcy in late November of last year.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Upcoming Events

Brooklyn, NY

SUN - MON, JUN. 22 - 23, 2025

Blockworks and Cracked Labs are teaming up for the third installment of the Permissionless Hackathon, happening June 22–23, 2025 in Brooklyn, NY. This is a 36-hour IRL builder sprint where developers, designers, and creatives ship real projects solving real problems across […]

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research

article-image

The Ethereum Foundation’s newly-formed Protocol division — leaner, led by EF veterans — sets the stage for the chain’s next major hard fork

article-image

The gap between cryptography breakthroughs is shortening

article-image

The Solana Attestation Service acts like a passport, letting wallets verify their permissions without doxxing the user

article-image

New legal developments and renewed US-China tensions have traders wondering if a “TACO Tuesday” is in the cards this week

article-image

The ETF Store president Nate Geraci expects the SEC to approve spot solana ETFs — and staking within SOL and ether ETFs — in 2025

article-image

Yuga cofounder Greg Solano says it’s time to be thoughtful, ‘but also kinda fucking ruthless’