A first version of the documents suggests that Nexo and Celsius Network are two of the companies targeted by the NY Attorney’s Office. Two firms received a ceasefire order while three other requests for information.
New York Attorney General Letitia James has ordered the cessation of digital currency lending platforms that are not properly registered in the state.
In a statement dated October 18, the New York Attorney General (NYAG) ordered the immediate cease and desist of two firms offering crypto loans. The ad also requires three other companies to provide information on its activities and products, including corporate ownership and the management of user deposits.
“Cryptocurrency platforms must comply with the law, just like everyone else, which is why we are now ordering two cryptocurrency companies to close and forcing three others to immediately respond to questions.James said in the statement, adding:
My office is responsible for ensuring that industry players do not take advantage of unsuspecting investors. We have already taken action against a number of cryptocurrency platforms that participated in the fraud or operated illegally in New York. Today’s actions build on that work and send a message that we will not hesitate to take whatever action is necessary against any company that it believes is above the law.
New York joins crypto-lending crackdown
The Office of the Attorney General (OAG) classified cryptocurrency lending platforms as “essentially interest accounts that offer investors a rate of return”In its digital currencies, and, as such, indicated that these services fall into the category of securities, according to the Martin Law of New York.
Passed in 1921, the Martin Act is a United States anti-fraud law that gives the Attorney General the authority to investigate any company deemed to be trading securities in the state.
“The virtual currency loan products in question in stocks today promise a fixed or variable rate of return to investors and claim to offer those returns, among other things, by trading or lending more of those virtual assets.NYAG said about it. According to the statement, the firms would be offering an unregistered securities service, incurring a federal violation.
Although the names of the companies were censored in the letters issued by the OAG, the news outlet The Block reported that a first version of the letter of cease and desist kept the name “Nexo Letter”, while the request for information was labeled in the name of “Celsius Letter“. The names imply two of the largest crypto lending platforms in the United States.
According to this medium, the cease and desist letter issued to Nexus gives that firm, and a second was not identified, a period of ten days to “cease each and every such activity and confirm to the Attorney General that the activity has ceased, or explain why the Attorney General should not take further action, including seeking all remedies permitted by law“.
Cryptocurrency loans under scrutiny in the US
For its part, the letter to Celsius was more modest, giving the company until Nov. 1 to provide information on its ownership structure, investment strategy, and means of custody for crypto deposits. LThe three other firms that received letters from NYAG remain unidentified.
In an email sent to CoinDesk and The Block, Nexus He assured that he does not offer his loan product in New York and that he takes the task of blocking users from that location based on their Internet address, or IP. Executive Director Antoni Trenchev wrote:
It doesn’t make much sense to get a C&D [carta de cese y desistimiento] for something we are not offering in NYC anyway. But we will engage with NYAG, as this is a clear case of confusion among the recipients of the letter.
The actions of the New York authority come at a time when Several US regulators are cracking down on crypto-lending companies. In the middle of this year, the popular cryptocurrency trading and lending platform BlockFi received a termination order from the New Jersey Bureau of Securities. Then the state also issued an order against its competitor, Celsius, and three other jurisdictions have also taken similar actions against BlockFi.
Although the Securities and Exchange Commission (SEC) has not officially intervened on these platforms, their president, Gary Gensler, has indicated that this issue is on the agency’s radar. Recently, Coinbase withdrew plans to launch a crypto loan product after receiving a warning from the SEC.
Hannah Estefanía Pérez’s version / DailyBitcoin
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