New York’s attorney general ordered two unlicensed cryptocurrency lending platforms to cease operating in the state as authorities continue to clamp down on crypto firms over fraud concerns.
The names of the companies were not disclosed. In an order, the Office of the Attorney General said it had evidence that the platforms were illegally selling or offering security products without being registered with the state as a broker-dealer. They have 10 days to close up shop in New York.
In a separate order, the state AG required three other unnamed crypto platforms to submit detailed explanations of their business models, including the nature of any lending and deposit products. Responses must be returned by Nov. 1.
The orders are the latest efforts by the state to curb unregistered cryptocurrency lending platforms that engage in fraud or illegally operate in New York, Attorney General Letitia James said in a press release.
“Today’s actions ... send a message that we will not hesitate to take whatever actions are necessary against any company that thinks they are above the law,” James said in the release.
Last month, James shut down Coinseed, a cryptocurrency trading platform, and recovered nearly half a billion dollars that the office said was unlawfully obtained from investors that supported GTV Media Group and its parent company, Saraca Media Group.
At issue is whether certain products offered by the lending platforms qualify as securities under New York’s Martin Act, an anti-fraud tool that gives the attorney general broad authority to investigate misconduct in the securities market.
According to the state, the cryptocurrency lending products offer a fixed or variable rate of return to investors by using virtual assets to make trades or loans.
In the release, the state said that “the nature and function of the most common virtual currency lending products and services” show that they “fall squarely within any of several categories of ‘security’ under the Martin Act” and therefore should be appropriately registered with the state.
Dealing in bitcoin in New York without being registered is illegal, the office said.
Digital currencies are a subject of growing concern for regulators and other officials that are worried about the risks. In August,
Some cryptocurrency firms want to work with regulators. Last month, the blockchain firm Circle took
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