New Jersey-based cryptocurrency company BlockFi is facing a lawsuit from Texas because of its alleged illegal action of selling unregistered securities through its BlockFi Interest Accounts. 

The state of Texas has specifically filed a cease-and-desist order against BlockFi’s two subsidiaries, BlockFi Trading and BlockFi Lending. 

In a statement released by the Texas State Securities Board, it said: “The Respondents (the two subsidiaries of BlockFi) have continued to offer the BlockFi Interest Accounts to Texans in violation of Section 7 and 12 of the Securities Act.” 

Mounting headaches for BlockFi

This recent legal response received by BlockFi is the third one it has received from different U.S. states. BlockFi has also previously received cease-and-desist orders from its home state New Jersey and from Alabama because of its BlockFi Interest Account service. 

When Alabama authorities filed a case against the company, BlockFi responded through Twitter by saying: “We have active dialogues with regulators worldwide, including those in Alabama, to share details about our products, which we believe are lawful.” 

BlockFi, even with the legal responses it has received, hasn’t backed down in offering its BlockFi IA offerings, saying that it doesn’t break any existing laws. 

The rise of crypto lending service

The ongoing situation between BlockFi and the authorities is highly important because its outcome would determine the future of crypto-based companies, especially crypto lending services, in the future. 

Alabama has given BlockFi 28 days to prepare a defense for its actions and clearly state why its operation shouldn’t be shut down by the authorities. New Jersey will give the company until July 29 to do the same. Texas will decide on BlockFi’s fate in October. 

Image courtesy of Cointelegraph News/YouTube

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Source: https://bitcoinerx.com/blockchain/texas-submits-its-case-against-blockfi/