BlockFi Initiates Legal Action against State Commission for Not Accepting Its Surrendered License
Instead of accepting or acknowledging the relicensing, the committee is insisting that BlockFi be subject to administrative procedures. The bankrupt cryptocurrency exchange was left with no choice but to sue Connecticut Banking Commissioner Jorge Perez.
BlockFi’s attempts to relicense sending money from Connecticut were futile, as the government regulator repeatedly refused to respond. Instead of accepting or acknowledging the relicensing, the committee is insisting that BlockFi be subject to administrative processes that require bankrupt cryptocurrency exchanges to go through some judicial process or pay a fine.
BlockFi filed for bankruptcy last year after the collapse of FTX, claiming outstanding debts from more than 100,000 creditors, with its 50 largest creditors totaling $1.3 billion. Filing for bankruptcy also means that the defunct crypto company will need to surrender its Connecticut money-sending license, which allowed it to facilitate money transfers within the state. The license is no longer needed as the company has already ceased operations.
The State Commission’s failure to respond to BlockFi’s request for relicensing
In December 2022, BlockFi attempted to file the license but did not receive a response from the commission. However, in February, a notice was sent to BlockFi from the state revoking the license and ordering it to stop doing business within the state. This came as a surprise to the company, given the steps it had taken to re-license and because it had halted all its activities when it filed for bankruptcy last year.
BlockFi made a subsequent attempt to file the license but received no response. Instead, the commission told the company that it would need to pay a $1 million fine to avoid court action.
Concerned about the situation, BlockFi was left with no choice but to sue the Connecticut Commissioner of Banking. Despite getting approval to sell its assets earlier this year, the company is saddled with significant debt. It aims to settle with its clients rather than engage in a lengthy court case or pay what it views as unjustified fees.
In its statement, BlockFi confirmed which – that:
“The Department’s self-help actions to revoke a license and assess financial penalties are in pursuit of its financial interest and do not seek to protect public health, safety, or welfare.”
BlockFi is trying to stop the court proceedings and make it clear that the state is at fault and breaking the law by revoking its license and seeking civil penalties.
The court hearing is scheduled for July 6, where BlockFi can present arguments supporting its position and potentially avoid the administrative hearing scheduled for July 20. The outcome of the July 6 court proceedings may determine whether or not the July 20 court meeting proceeds.
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Temitope is a writer with over four years of writing experience in various fields. He has a particular interest in the fintech and blockchain spaces and enjoys writing articles in those areas. He holds a Bachelor’s and Master’s degrees in Linguistics. When he’s not writing, he’s trading forex and playing video games.
