The world of CeFi has been growing massively, and centralised exchanges, which hold substantial amounts of customer's crypto, have been increasingly excited at offerings of yield on crypto loans which can be passed through to customers, or offered as an outright product, prompting media to warn these are not 'bonds' and highlighting they can be high risk.
The US Securities and Exchange Commission is considerably less excited at the prospect and has announced investigations into Gemini, Celsius Networks and BlockFi, focusing on these yield products.
Now BlockFi is reportedly a party to a settlement agreement with the SEC under which it will pay USD$100M in fines, split USD$50M to the Federal SEC and USD$50M to various State SECs (likely including New Jersey, Texas, Kentucky, Alabama and Vermont which had also announced investigations). BlockFi will also cease offering interest to customers as part of the orders.
It's worth noting that the USA maintains a system of both state and federal securities regulation whereas countries like the UK and Australia use a federated model with one regulator overseeing all securities and licensing.
These yielding products, which come in a variety of forms, can sometimes be legitimate technical assistance for customers into staking mechanism, but often look like they involve pooling and management of customers crypto, are sure to remain a hot area for regulators as crypto and blockchain continue to rewrite financial systems.