Two of the crypto lending platforms are in violation of the laws for not registering with the State.
The Office of the Attorney General (OAG) New York, Letitia James, issued an order on Monday for two cryptocurrency lending platforms to shut down and also asked three others to answer questions regarding their activities and offerings.
Two redacted (censored) letters were released by the OAG which issued the orders.
One letter contains directives for two crypto lending platforms to shut.
The second letter ordered three platforms to give details about their functioning.
None of the letters disclosed the names of the companies.
But Nexo Financial LLC confirmed that it is one of the parties to receive the cease-and-desist order.
An anonymous source also told Bloomberg that Celsius Network LLC is one of the companies which received the letter asking for information.
“My office is responsible for ensuring industry players do not take advantage of unsuspecting investors. We’ve already taken action against a number of crypto platforms and coins that engaged in fraud or that illegally operated in New York. Today’s actions build on that work and send a message that we will not hesitate to take whatever actions are necessary against any company that thinks they are above the law.”Attorney General Letitia James
Why are the Crypto Lending Platforms Ordered to Shut?
The two platforms, which were served with the cease-and-desist order, are being prosecuted on grounds of not being registered with the State.
“In New York, these lending platforms must register with the Office of the Attorney General (OAG) if they are operating within the state or offering their products to New Yorkers,” reads the press release.
Crypto lending products are categorised as a security, which falls under the ambit of the state’s Martin Act requiring registration. That’s why crypto lending platforms must be registered with the OAG as brokers, dealers, or salespersons unless exempted.
What Information is Sought from the other three platforms?
The letter asks for the legal names of the companies, their product offerings, wallet details, fiat deposits etc.
It also asked specifically for details about any connection of the products with the USDT (Tether) and its issuer Tether Limited.
Tether has been under the lens of the OAG New York for a long time. Just last month around half of the class-action suits against it were dismissed by a New York judge.
The State of New York is ramping up its efforts to check the use of crypto assets; it is a good sign for the consumers. In February the OAG reached a settlement with iFinex, the parent of Bitfinex and Tether for commingling funds. The actions of the State are not expected to hinder innovation as the Federal Reserve has also expressed that it does not intend to ban crypto.
News recommendation: Millennials From Smaller Cities Driving Crypto Adoption in India
Cover Photo Source: Flickr