BlockFi Lending License Revoked Over Unsafe Practices

The California Department of Financial Protection and Innovation (DFPI) announced on Thursday that it has revoked the lending license of crypto lender BlockFi Lending LLC due to multiple regulatory violations.

BlockFi agreed to the revocation of its California Financing Law (CFL) license and to cease unsafe practices as part of a settlement with the DFPI. The action follows an examination by the regulator and a prior license suspension in November 2022.

BlockFi Violations

The DFPI found that BlockFi violated the CFL by failing to assess borrowers’ ability to repay loans, charging interest before loan proceeds were disbursed, and not providing consumers with credit counseling. It also reportedly neglected to report payment performance to credit bureaus, and inaccurately disclosed annual percentage rates (APRs) in loan documents.

“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,” DFPI Commissioner Clothilde V. Hewlett said in a statement.

Bankruptcy Filing

BlockFi filed for bankruptcy in 2022, shortly after the collapse of cryptocurrency exchange FTX Trading Co. The company’s bankruptcy plan administrator recently announced that it has recovered sufficient assets to make all customers whole.

Under the settlement agreement, the DFPI imposed a $175,000 fine on BlockFi for its violations but waived the payment to prioritize consumer recovery, given that the company is in bankruptcy and no longer operating.

In February 2022, the DFPI had entered into a consent order with BlockFi to resolve allegations that the company offered and sold unqualified, non-exempt securities.

The DFPI emphasized that all financial services providers operating in California are expected to comply with state financial laws. Consumers can submit complaints to the DFPI online at or call toll-free at (866) 275-2677 for assistance.

The announcement comes amid increased regulatory scrutiny of cryptocurrency lenders and follows a series of enforcement actions against other firms in the sector.

Vanessa has no crypto positions and does not hold any crypto assets. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Daily is an official media and publication of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.

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