👨🏻‍⚖️ SEC Says BlockFi Misrepresented Risk to Crypto Depositors In $100M Order

Hello Defiers! Here’s what we’re covering today: News SEC Says BlockFi Misrepresented Risk to Crypto Depositors In $100M Order U.K. Seizes NFTs in Fraud Probe as Authorities Hunt for Illicit Digital Assets Why Startup Founders Should Check In With Thei...

Hello Defiers! Here’s what we’re covering today:





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Regulatory Action

👨🏻‍⚖️ SEC Says BlockFi Misrepresented Risk to Crypto Depositors In $100M Order

NEWS The U.S. Securities and Exchange Commission (SEC) alleges that crypto lender BlockFi inaccurately described the level of risk its depositors were exposed to, in an order explaining a $100M settlement between BlockFi and federal and state securities regulators.

RISK “BlockFi made a material misrepresentation to BIA [BlockFi Interest Account] investors concerning the level of risk in its loan portfolio,” the order signed by SEC Secretary Vanessa Countryman stated. “BlockFi made a statement in multiple website posts that its institutional loans were ‘typically’ over-collateralized, when in fact, most institutional loans were not.”

VERIFIABLE The SEC findings illuminate one of the key differences between centralized financial offerings and those made through decentralized finance lending and saving platforms, where the positions and terms for each depositor and lender are verifiable on the blockchains they run atop.


NFT Cases

👮‍♂️ U.K. Seizes NFTs in Fraud Probe as Authorities Hunt for Illicit Digital Assets

FRAUD In a move that demonstrates how digital assets are being targeted in legal cases, British authorities have seized three NFTs linked to a criminal fraud investigation, according to a Feb. 14 report in the BBC.

SCHEME Her Majesty’s Revenue & Customs (HMRC), the equivalent of the IRS in Britain, seized three NFTs and roughly £5,000 ($7,800) worth of crypto assets as part of investigations into a suspected tax fraud scheme worth £1.4M. The action comes a week after the U.S. Justice Department seized $3.6B in stolen Bitcoin and accused a married couple of laundering the proceeds of a 2016 hack of Bitfinex, a Hong Kong-based crypto exchange.

IMPOUNDED Nick Sharp, deputy director for economic crime at HMRC, said on his LinkedIn page that he believes this is the first time a U.K. law enforcement agency has impounded NFTs. He said the case “shows that [NFTs] can and will be seized when linked to fraud and criminality.”


DeFi Compliance

🏛 Why Startup Founders Should Check In With Their Investors About Compliance

DOCUMENTATION There are over 4,000 words in the U.S. Securities and Exchange Commission’s rule describing all the documentation that a registered investment advisor needs to maintain.

OBLIGATIONS And more and more venture capital firms investing in the blockchain industry are getting large enough that they have to become registered investment advisors (RIAs), and this dramatically increases their compliance obligations. This has a privacy impact for companies invested in by these firms, to a degree that many entrepreneurs may not yet appreciate.

CRYPTO FUNDS “Books and records requirements that track every trade and investment that you’re doing, that needs to be available to the SEC if they decide to audit you” Adam Tope, a partner at DLA Piper, told The Defiant. “It’s basically just like being any hedge fund.” Tope has been working with all kinds of crypto funds for years now.


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The Tube

📺 Quick Take: Crypto is a Clown Show


🔗 Federal Judge Releases 'Razzlekhan,' Orders Other Bitfinex Hack Laundering Suspect to Remain in Jail: CoinDesk

A federal judge has ordered one half of the couple accused of laundering the proceeds of a 2016 Bitfinex hack to remain in federal custody until they face trial.

🔗 Coinbase plans to add 2,000 employees across Product, Engineering and Design in 2022: Coinbase

At Coinbase we have an ambitious mission to increase economic freedom in the world.

🔗 “Dude, what’s the Danksharding situation?” Workshop: Ethereum Foundation

EF Research team hosting an educational seminar on "DankSharding."

🔗 NFT house sells for $654k in historic auction — Tampa condo up next: Tampa Bay Times

A house in Gulfport auctioned off as a non-fungible token on Thursday sold for $654,310, or about 210 ethereum. It’s a first for U.S. real estate, according to real estate transaction firm Propy.


Art Blocks @artblocks_ioWe are heading to @EthereumDenver this week and hosting a pop-up event on Thursday the 17th from 5-9. If you're around, come say hello 🤖


Art Blocks @artblocks_ioDo you live in the Denver area or are you attending @EthereumDenver next week? If so, please join us for a special pop-up event on Feb 17th from 5-9pm! We'll have an After Dinner Mints panel discussion on DAOs plus food, drinks and AB merch will be provided to all who attend. https://t.co/T9cihTQCP78:50 PM ∙ Feb 14, 202238Likes7Retweets


yearn.finance @iearnfinanceYearn intern’s 📱 is blowing up with questions about the APYs listed on Yearn’s Fantom vaults They’re currently overstated Here’s why 👇5:32 PM ∙ Feb 14, 202297Likes22Retweets

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🧑‍💻 ✍️ Stories in The Defiant are written by Brady Dale, Owen Fernau, Samuel Haig, DeFiDad, and yyctrader, and edited by Edward Robinson, yyctrader, and Camila Russo. Videos are produced by Robin Schmidt, Alp Gasimov and Daniel Flynn. Podcast is led by Camila, edited by Alp.

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The Defiant is a daily newsletter focusing on decentralized finance, a new financial system that’s being built on top of open blockchains. The space is evolving at breakneck speed and revolutionizing tech and money. Sign up to learn more and keep up on the latest, most interesting developments. Subscribers get full access, while free signups get only part of the content. Click here to pay with DAI (for $100/yr) or sub with fiat by clicking on the button above ($15/mo, $150/yr)