California Permanently Cuts Off BlockFis License Over Bad Lending Practices
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 troubles tied to the downfall 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.
The DFPI’s revocation of BlockFi’s license stems from findings that the lender breached California’s Financing Law by failing to assess borrowers’ ability to repay and charging interest before loans were issued, according to a now-deleted DFPI press release.
BlockFi also did not provide required credit counseling and inaccurately disclosed loan terms, impacting borrowers’ credit scores and ability to access future loans.
In addition to the revocation, BlockFi reached a settlement with the DFPI, agreeing to stop unsafe practices. The regulator imposed a $175,000 fine, waiving the payment to focus on creditor repayments, per the release.
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