Popular crypto lender BlockFi will have to pay $100 million in penalties in the US for operating as an unregistered investment company.

The company’s interest accounts, which let users earn returns on cryptocurrencies like Bitcoin and Ethereum, were found to be unregistered securities.

Warning that the crypto lending ecosystem should “take immediate notice of today’s resolution” and comply with US securities laws, the Securities and Exchange Commission (SEC) charged BlockFi Lending with failing to register the offers and sales of its retail crypto lending product.

In this first-of-its-kind action, the SEC on Monday charged BlockFi with violating the registration provisions of the Investment Company Act of 1940.

To settle the SEC’s charges, BlockFi agreed to pay a $50 million penalty, cease its unregistered offers and sales of the lending product, BlockFi Interest Accounts (BIAs), and attempt to bring its business within the provisions of the Investment Company Act within 60 days.

In parallel actions, BlockFi agreed to pay an additional $50 million in fines to 32 states to settle similar charges.

“This is the first case of its kind with respect to crypto lending platforms,” said SEC Chair Gary Gensler.

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“Today’s settlement makes clear that crypto markets must comply with time-tested securities laws, such as the Securities Act of 1933 and the Investment Company Act of 1940,” Gensler added.

According to the SEC order, from March 4, 2019, until today, BlockFi offered and sold BIAs to the public.

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Through BIAs, investors lent crypto assets to BlockFi in exchange for the company’s promise to provide a variable monthly interest payment.

“Crypto lending platforms offering securities like BlockFia?s BIAs should take immediate notice of today’s resolution and come into compliance with the federal securities laws,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement.

The order also said that BlockFi made a false and misleading statement for more than two years on its website concerning the level of risk in its loan portfolio and lending activity.

After the order, the crypto company announced BlockFi Yield (BY), which is anticipated to be the first SEC-registered crypto interest-bearing security.

“We intend for BlockFi Yield to be a new, SEC-registered crypto interest-bearing security, which will allow clients to earn interest on their crypto assets,” said Zac Prince, CEO and Founder of BlockFi.