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BlockFi Lost California License Two Years after Bankruptcy

Author: Content Editor
The California Department of Financial Protection and Innovation (DFPI) has permanently revoked the license of bankrupt crypto lender BlockFi due to multiple regulatory violations. BlockFi breached license conditions by failing to assess borrowers' repayment ability, charging interest before loan proceeds were disbursed, not providing credit counseling to consumers, failing to report payment histories to credit bureaus, and inaccurately disclosing annual percentage rates (APRs). The company has agreed to settle by accepting the license revocation and ceasing any practices that violated regulations. BlockFi's troubles began after the collapse of FTX, which led the crypto lender to file for bankruptcy. BlockFi reached a settlement with FTX earlier this year, securing potential repayments of up to $874 million. The goal of the bankruptcy estate is to return "100 percent" of distressed clients' claims, based on the date of bankruptcy rather than current crypto market rates. The California regulator had been investigating similar platforms and had previously disclosed its scrutiny of crypto companies offering interest-bearing accounts.

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