That BlockFi had borrowed crypto wasn’t the issue here. In fact, you could replace “crypto” with any other asset. The issue was what it did with the borrowed assets and what it didn’t do as a firm: provide the required disclosures to investors. Compliance with our laws protects the investing public. Unfortunately, some platforms that offer crypto lending aren’t complying with the applicable requirements.
We can dispense with the idea that crypto lending isn’t subject to regulation. On the contrary, the rules have been around for decades. The platforms aren’t following them. Noncompliance isn’t the inevitable result of the crypto business model or underlying crypto technology. Rather, it is as if these platforms are saying they have a choice—or even worse, saying “Catch us if you can.”
‘Enforcement 40’ for 2020
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