SACRAMENTO –The California Department of Financial Protection and Innovation (DFPI has revoked crypto lender BlockFi Lending LLC’s California Financing Law (CFL) license, the Department said.
BlockFi also entered into a settlement agreeing to the license revocation, to desist and refrain from the violations, and to discontinue unsafe or injurious practices, the DFPI said.
The action is the result of the DFPI’s examination and follows a license suspension in November 2022. The Department found that the company violated the CFL by failing to consider borrowers’ ability to repay their loans, charging borrowers interest before the loan proceeds were disbursed, failing to provide consumers with credit counseling, failing to report payment performance to credit bureaus, and failing to accurately disclose annual percentage rates (APRs) in loan disclosure documents, the DFPI said.
BlockFi filed for bankruptcy in 2022, shortly after the collapse of the cryptocurrency exchange FTX Trading Co. (FTX). BlockFi’s bankruptcy plan administrator recently announced that it has recovered sufficient assets to make all customers whole, the DFPI explained.
“While we encourage innovation in our financial marketplace, companies must comply with laws and protect consumers in accordance with those laws to continue doing business in California” said DFPI Commissioner Clothilde V. Hewlett.
Under the settlement agreement, the Commissioner levied a $175,000 fine for BlockFi’s CFL violations but waived payment of the fine to prioritize consumer recovery and because the company is in bankruptcy, is no longer operating, and will not operate in the future.
In February 2022, the DFPI entered into a consent order with BlockFi to resolve allegations that the company offered and sold unqualified, non-exempt securities, the DFPI noted.