Capitol Notebook: Lender fined $1M by state insurance regulators

DES MOINES — A lending company has been ordered by state insurance regulators to pay a nearly $1 million fine for offering and selling securities that were not permitted for sale in Iowa and for doing so without being registered as an agent in the state.

Iowa Insurance Commissioner Doug Ommen announced Tuesday his office issued a consent order against BlockFi Lending LLC, ordered the company to pay an administrative fine in the amount of $943,396.22, and to stop making any untrue statement of material facts regarding securities.

“While innovations, like cryptocurrencies, may provide for growth and evolution in the financial system, it is important that regulators ensure this occurs within an appropriate framework that protects investors while still facilitating responsible capital formation,” Ommen said in a news release.

The order is part of the results of an investigation involving the federal government and 53 jurisdictions, Ommen’s office said. BlockFi will pay settlements up to $50 million to the 53 jurisdictions and another $50 million to federal regulators, the news release said.

The order claimed BlockFi made misrepresentations and omissions about the level of risk in its loan portfolio which did not allow investors to have complete and accurate information to evaluate the risk of the investment, Ommen’s office said.

“Whatever investors’ knowledge or interest in cryptocurrency, investors need accurate information to base their decisions on,” Ommen said in the news release. “Iowans are encountering new innovations in the investment area with the advent and greater adoption of cryptocurrencies, however, speculative investments such as these should be handled just as such — as speculative. Iowans should make sure they are only investing what they may be willing to lose.”

From 2019 to 2021, assets held in Iowa by BlockFi and its affiliates went from $267,626 to more than $14 million, Ommen’s office said.

TRANSPORTATION PLAN OK’D: The Iowa Transportation Commission approved the $4.2 billion draft state transportation improvement program for state fiscal years 2023 through 2027.

The program includes investments in Iowa’s highways, public transit, trails, aviation and railroad systems. The funding comes from a mixture of state and federal resources.

The plan includes the infusion of federal funding as part of the 2021 infrastructure bill, which boosted highway-related funding by roughly 30 percent, the DOT said. However, a significant portion of that increased funding has been allocated to existing projects to offset large increases in material and fuel costs due to inflation, the DOT said.

The full program can be viewed online at iowadot.gov.

Gazette Des Moines Bureau