BlockFi ordered to stop opening new interest accounts in New Jersey

Popular crypto trading and lending platform BlockFi has been ordered by the New Jersey Bureau of Securities to suspend accepting new interest account users in the Garden State.

In a Twitter thread on Monday night Eastern time, BlockFi's CEO and founder Zac Prince said the firm remains operational for its existing clients in New Jersey but "the order calls for BlockFi to stop accepting new BIA [BlockFi interest account] clients residing in New Jersey beginning July 22, 2021."

Prince's response came just shortly after a Forbes article that said the New Jersey Attorney General and its Bureau of Securities are preparing to issue a cease and desist order against the firm.

The Forbes report cited a draft press release from the AG's office, which reportedly indicated that BlockFi's service is powered "at least partly through the sale of unregistered securities in alleged violation of relevant securities laws." 

BlockFi's interest account is popular because of its high-yields relative to its counter-parts in the traditional financial services world, offering double-digit APY while fintechs currently offer sub 1% yields. The AG's move also came less than a month after BlockFi announced the interest account product would support UNI, the governance token tied to decentralized exchange Uniswap.

Originally, in a response to the Forbes article, Prince said BlockFi "has no knowledge of any impending actions with the New Jersey Attorney General's office."

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Frank Chaparro covers the intersection of financial markets and cryptocurrency as Editor-at-Large. Since joining the publication in 2018 as its first reporter, he has played a key role in building The Block into a leader in financial journalism and research. He leads special projects, including The Block's flagship podcast, The Scoop. Prior to The Block, he held roles at Business Insider, NPR, and Nasdaq. For inquiries or tips, email [email protected]