Instead of accepting or acknowledging the license return, the commission insists that BlockFi undergo administrative proceedings. The bankrupt crypto exchange was left with no option but to sue Jorge Perez, the Connecticut banking commissioner.
BlockFi’s attempts to return its Connecticut money transmitter license have been futile, as the state regulator has repeatedly refused to respond. Instead of accepting or acknowledging the license return, the commission insists that BlockFi undergo administrative processes that would require the bankrupt crypto exchange to go through some court proceedings or pay a fine.
BlockFi filed for bankruptcy last year following the FTX crash, claiming debts owed to over 100,000 creditors, with its 50 largest creditors accounting for a total of $1.3 billion. Filing for bankruptcy also means that the defunct crypto company would need to surrender its Connecticut money transmitter license, which allowed it to facilitate the transfer of funds within the state. The license was no longer needed since the company had already stopped its operations.
The State Commission’s Lack of Response to BlockFi’s Request for License Return
In December 2022, BlockFi attempted to submit the license but received no response from the commission. However, BlockFi was sent a notice from the state revoking the license and ordering it to stop doing business within the state in February. This came as a surprise to the company, considering the steps it had taken to return the license and because it had halted all its activities when it filed for bankruptcy last year.
BlockFi made a subsequent attempt to submit the license but received no response. Instead, the commission informed the company that it would need to pay a $1 million fine to avoid court proceedings.
Concerned about the situation, BlockFi was left with no choice but to sue the Connecticut banking commissioner. Despite receiving approval to sell its assets earlier this year, the company is burdened by significant debt. It aims to settle with its clients rather than engage in a protracted court case or pay what it considers unwarranted fees.
In its statement, BlockFi emphasized that:
“The Department’s self-help actions to revoke the license and assess monetary penalties are in pursuit of its pecuniary interest and do not seek to protect public health, safety, or welfare.”
BlockFi is attempting to halt the court proceedings and make it clear that the state is wrong and violating the law by revoking its license and seeking civil penalties.
A court proceeding is scheduled for July 6, during which BlockFi can present arguments in support of its position and potentially avoid the administrative hearing scheduled for July 20. The outcome of the July 6 court process may determine whether the July 20 court meeting proceeds or not.
Temitope is a writer with more than four years of experience writing across various niches. He has a special interest in the fintech and blockchain spaces and enjoy writing articles in those areas. He holds bachelor’s and master’s degrees in linguistics. When not writing, he trades forex and plays video games.