Texas Regulator Files Suit against BlockFi for Securities Law Violation

​Fazzaco learned that the Texas State Securities Board (TSSB), the Texas state regulator, has moved against crypto unicorn BlockFi, alleging that the BlockFi Interest Account (BIA) has possibly violated the state securities laws.

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According to a notice published last Thursday, the TSSB filed for a cease-and-desist order against BlockFi, BlockFi Trading and BlockFi Lending. In addition, the notice is seeking BlockFi's response on the matter within 20 days of serving. But, the company will be allowed to continue to offer its services until the court approves the cease-and-desist order.

"The Enforcement Division also explained [on April 20] the regulation of the securities market in Texas, including the identification of laws that require the registration of securities, the registration of dealers and agents, and the truthful disclosure of all known material facts. Nevertheless, Respondents have continued to offer the BIAs to Texans in violation of Sections 7 and 12 of the Securities Act," the recent notice stated.

Fazzaco earlier reported that BlockFi has named Lei Lei as Director of Institutional Sales to cover endowments, pension funds, asset managers, insurance companies, corporate entities, and sovereign wealth funds. Additonally, the company launched its Over-The-Counter (OTC) trading desk​ for institutions and ultra-high net worth clients at the beginning of this year.