The Attorney General intends to shut down two crypto lenders, which she identified as “unregistered crypto lending platforms.” She has asked three other similar platforms to provide answers regarding their activities immediately.
New York Attorney General (NYAG) Letitia James has announced her intentions to crack down on unregistered cryptocurrency companies. According to the press release, the crypto lending platforms were in contravention of the stipulations of General Business Law § 352 et seq —better known as the “Martin Act.” The law requires lending platforms operating in New York to register with the Office of the Attorney General before offering their products to its residents. The announcement stated:
“Today, Attorney General James directed two of these lending platforms to immediately cease their unregistered and unlawful activities in New York and directed three other platforms to provide information about their activities and products immediately.”
Letters had file names that seemed to point to Nexo and Celsius Network
Ms. James reasons that cryptocurrency lending platforms are “interest-bearing accounts” and therefore must register with the OAG. Even though the Attorney General didn’t specify the affected companies in her press release, the letters had file names that seemed to point to Nexo and Celsius Network as the recipients of cease and desist orders. A Nexo official explained:
“Nexo is not offering its Earn Product and Exchange in New York, so it makes little sense to be receiving a C&D for something we are not offering in NY anyway. But we will engage with the NY AG as this is a clear case of mixing up the letter’s recipients. We use IP-based geoblocking.”
Ms. Letitia specified she had issued five notifications to platforms operating in New York. For some, she gave a cease and desist order, while for others, she requested information before taking further action. She said:
“Cryptocurrency platforms must follow the law, just like everyone else, which is why we are now directing two crypto companies to shut down and forcing three more to answer questions immediately.”
Cryptocurrency lending service providers have had a rough time
The AG also asked for personal data of users with unverified accounts, breakdown of KYC procedures, jurisdictions to which they offer services, and legal documents. Among the 14 demands issued include user/client names, user IDs, date, time, IP addresses, and any other captured client information that could connect from New York.
Cryptocurrency lending service providers have had a rough time in the United States this year. Even Coinbase, the largest volume cryptocurrency exchange in the US, could not keep up with a cryptocurrency lending service that aimed to outperform high-yield accounts offered by traditional banks. Other cryptocurrency lending services like Blockfi and Celsius have shut down in several US states.
Tom is a freelance writer with over 10-years’ experience in content creation, blog writing, and SEO specializing in the blockchain and cryptocurrency niche. As a philosophical figurehead, he believes that to make our world a better place, we must invest in incorruptible products and procedures, of which Bitcoin and other cryptocurrencies are leading examples.
