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Alabama regulator accuses BlockFi of violating securities laws, may stop platform from selling 'unregistered securities' in the state

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BlockFi now has 28 days to provide reasons why it should not be forced to stop selling "unregistered securities" in Alabama.

BlockBeats - On July 23, Alabama Securities Commission (ASC) Director Joseph Borg officially announced that the commission has issued a "cause indication order" to New Jersey based BlockFi Inc. Show-cause order means a command that asks for a reason. An order or order made ex parte by a court requiring a party adversely affected to appear before the court to state why a certain measure or action should not be taken.

BlockFi, which already faces a cease-and cease-order from the New Jersey Bureau of Securities, now has 28 days to provide reasons why the platform should not be forced to stop selling "unregistered Securities" in Alabama, the regulator said.

BlockFi's interest-bearing cryptocurrency BlockFi Interest accounts constitute securities, according to the ASC. "BlockFi raised at least $14.7bn globally through the sale of these securities," the regulator said.

BlockFi and its affiliates, BlockFi Lending and BlockFi Trading, have been financing their crypto Lending operations and Trading "at least in part" with funds generated from the sale of unregistered securities in violation of securities laws, the ASC said. The order also says BlockFi failed to disclose to investors that its bias was not approved by the ASC or any other securities regulator, even though the company bills itself as a 'U.S. company' regulated entity."

In response, BlockFi said it still believes its products are legal and appropriate for crypto market participants, adding: "Our position has not changed -- BlockFi interest accounts are not securities."

The New Jersey securities regulator has issued a cease-and desist order to BlockFi, prohibiting it from introducing new interest account customers in the state, According to A previous report by Law.