The United States Securities and Exchange Commission has agreed to defer payment of a $30 million fine from bankrupt crypto lender BlockFi until creditors are repaid. The amount represents the balance of a $50 million deal with the regulator from February 2022.
According to the judicial presentations of June 22, the SEC will waive the amount owed by BlockFi to “maximize” and avoid delays in distributing funds to investors “until full payment of all other Allowed Claims.” The document stated: “The Commission has agreed to waive participation in any distributions under the Plan or to require any cash reserves in connection with such distributions.”
In February 2022, the SEC advertisement action against the crypto-lending company for failing to register its high-yield interest accounts as securities. BlockFi agreed to pay $50 million to the regulator as part of the settlement and another $50 million to 32 US states that filed similar complaints.
According to court documents, the SEC led BlockFi’s list of creditors, along with West Realm Shires Services Inc. (doing business as FTX US). BlockFi filed for Chapter 11 bankruptcy in late November after the FTX crisis raised questions about its financial health. According to its bankruptcy filing, BlockFi had $256.9 million in liquidity at the time.
On May 11, A federal judge granted BlockFi permission to return $297 million to customers with deposits in its Wallet program. The refund did not apply to users of BlockFi Interest Accounts (BIAs) that were used in their lending business and owned by bankruptcy states. BlockFi’s BIA accounts have more than USD 375 million.
BlockFi will also repay more than $100,000 to California customers who continued to repay loans even after the company went out of business on November 10 of last year. An investigation by the California Department of Financial Protection and Innovation found that at least 111 borrowers in the state made approximately $103,471 in loan repayments after filing for bankruptcy.
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