The California Department of Financial Protection and Innovation has permanently revoked BlockFi’s lending license following its bankruptcy and regulatory issues.
BlockFi, a crypto lending platform, collapsed in 2022 amid financial problems related to the fall of crypto exchange FTX.
BlockFi had extended a $400 million credit line to FTX, and FTX’s bankruptcy had ripple effects, contributing to BlockFi’s financial instability and eventual bankruptcy filing.
BlockFi’s Checkered Past
The DFPI’s revocation of BlockFi’s license stems from findings that the lender violated California financing law by failing to assess borrowers’ ability to repay and charging interest before issuing loans, according to a now deleted press release from DFPI.
BlockFi also failed to provide required credit counseling and inaccurately disclosed loan terms, which impacted borrowers’ credit scores and their ability to access future loans.
In addition to the revocation, BlockFi reached an agreement with the DFPI, agreeing to stop the dangerous practices. The regulator imposed a fine of $175,000, forgoing payment to focus on repaying creditors, according to the release.
