California permanently cuts off BlockFi’s license over bad lending practices

The California Department of Financial Protection and Innovation permanently revoked BlockFi’s lending license following bankruptcy and regulatory issues.

Crypto lending platform BlockFi collapsed in 2022 amid financial problems tied to the collapse of crypto exchange FTX.

Today, we are announcing that we have revoked the California Financing Law (CFL) license of crypto lender BlockFi. BlockFi agreed to a settlement that included revoking its license and abandoning harmful practices. More: https://t.co/gdi28TpY7H pic.twitter.com/S1uieLHbkP

— CA Department of Financial Protection and Innovation (@CaliforniaDFPI) November 8, 2024

BlockFi had extended a $400 million line of credit to FTX, and FTX’s bankruptcy created ripple effects, contributing to BlockFi’s financial instability and eventual filing for bankruptcy.

BlockFi’s rocky history

DFPI’s revocation of BlockFi’s license stems from findings that the lender violated the California Financing Code by failing to assess borrowers’ ability to repay and charging interest before loans were made, according to a now-deleted DFPI press release.

BlockFi also failed to provide required credit counseling and inaccurately described loan terms, impacting borrowers’ credit scores and ability to access future loans.

In addition to the cancellation, BlockFi reached an agreement with DFPI to stop unsafe practices. The regulator imposed a $175,000 fine, waiving the payment to focus on repaying creditors, according to the statement.