The Department of Banking News Bulletin
Bulletin # 3031 - Week Ending March 25, 2022
This bulletin constitutes the only official notification you will receive from this office concerning any of the following applications. Any observations you may have are solicited. Any comments should be in writing to Jorge L. Perez, Banking Commissioner, Department of Banking, 260 Constitution Plaza, Hartford, CT 06103-1800. Written comments will be considered only if they are received within ten business days from the date of this bulletin.
CONSUMER CREDIT ACTIVITY
On March 15, 2022, the Commissioner entered into a Consent Order with Prime Trust, LLC d/b/a Prime Trust (NMLS # 2240901) (“Prime”), Las Vegas, Nevada. The Consent Order was based on an investigation by the Consumer Credit Division. As a result of such investigation, the Commissioner alleged that Prime engaged in the business of money transmission in this state without the required license since at least 2019, in violation of Section 36a-597(a) of the Connecticut General Statutes. As part of the Consent Order, Prime paid $10,000 as a civil penalty and $3,375 in back licensing fees.
On March 17, 2022, the Commissioner entered into a Consent Order with Mortgage Network, Inc. (NMLS # 2668) (“Mortgage Network”), Danvers, Massachusetts. The Consent Order was based on an investigation by the Consumer Credit Division. As a result of such investigation, the Commissioner alleged that Mortgage Network failed to file with the Nationwide Multistate Licensing System and Registry a change of the address of its branch office at least thirty (30) calendar days prior to such change and, in connection with such change, failed to provide a bond rider or endorsement, or addendum, as applicable, to the surety bond on file with the Commissioner, in violation of Section 36a-490(b)(2) of the Connecticut General Statutes. As part of the Consent Order, Mortgage Network paid $500 as a civil penalty.
SECURITIES AND BUSINESS INVESTMENTS DIVISION ACTIVITY
BlockFi Lending LLC
On March 25, 2022, the Banking Commissioner entered a Consent Order (No. CO-22-202213-S) with respect to BlockFi Lending LLC (“Respondent”), a New Jersey-based financial services company that offered and sold interest-bearing digital asset accounts called BlockFi Interest Accounts (“BIAs”) to the public from 2019 through February 2022. Investors would lend digital assets to Respondent in exchange for variable monthly interest payments. The Consent Order was entered in conjunction with a multi-state settlement pursuant to which Respondent agreed to pay up to $50 million to participating jurisdictions.
As of December 8, 2021, Respondent and its affiliates held approximately $10.4 billion in BIA investor assets, and had approximately 572,160 BIA investors, including 391,105 investors in the United States. As of December 31, 2021, Respondent and its affiliates held approximately $94,038,394 in BIA investor assets from Connecticut residents. Respondent ceased selling BIAs to new investors or accepting further BIA investments by current investors nationwide in February 2022.
The Consent Order alleged that Respondent violated Section 36b-16 of the Connecticut Uniform Securities Act by selling unregistered securities to Connecticut residents and that Respondent’s securities offering included a materially misleading website statement concerning Respondent’s collateralization practices in contravention of Section 36b-4 of the Act.
The Consent Order directed Respondent to cease and desist from regulatory violations and to pay a $943,396.22 fine to the agency in four installments. The fine amount represented Connecticut's proportionate share of the multi-state settlement.
Jorge L. Perez