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Two days ago the New Jersey Bureau of Securities issued a cease and desist order to stop allowing new clients from New Jersey, alleging that BlockFi has been offering securities to its clients. 

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The Bureau said that BlockFi "has been, at least in part, funding its lending operations and proprietary trading through the sale of unregistered securities in the form of cryptocurrency interest-earning accounts." 

Now, regulators from Alabama have issued a show cause order, requiring BlockFi to justify and explain its interest accounts to the regulator. The order gives BlockFi 28 days "to show cause why they should not be directed to cease and desist from selling unregistered securities in Alabama."

The state's order claims that BlockFi has partially funded its cryptocurrency lending operations with the sale of cryptocurrencies, which it believes to be unregistered securities.

The SEC provides a long definition for a security as to cover all the possible forms they can come in, but put simply, a security is an asset that provides ownership in an entity. 

This comes in a plethora of forms, but assets such as precious metals, art, rare coins or diamonds are not considered securities.

Given the nature of something like Bitcoin, it's hard to imagine the possession of such a 'coin' represents any ownership in an entity. Regardless, the states of New Jersey and Alabama believe this to be the case. 

This story is developing.