New York AG Orders Unregistered Crypto Platforms To Cease Operations

New York State has ramped up its crackdown against the cryptocurrency space. Attorney General Letitia James recently ordered two crypto lending platforms to close their operations within the state.

New York Combats Unregistered Securities

It confirmed Attorney General James’s motion in a press release from her government website earlier today. Her actions are part of an effort to protect New Yorkers from so-called “virtual currency schemes.”

The AG sent a letter to two unnamed cryptocurrency lending platforms, demanding they cease unregistered lending securities within ten days. This comes after she ordered businesses dealing in crypto to register with the Investor Protection Bureau back in March.

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New York Attorney General Letitia James. Source: CNBC

The letter asserts that one of the unnamed platforms has offered “securities” that fall under the Marin Act. The document requires that all securities subject to public trades in New York be part of a filing dossier with the government. James defines the platform’s products as “securities” because they promise a rate of return to investors facilitated through those assets.

Although the crypto platforms were left unidentified in the letter, Nexo confirmed that it received one such letter from the AG. The company says James’s order is nonsensical, as they do not offer lending products in New York. However, they will remain cooperative, calling this “a clear case of mixing up the letter’s recipients”.

Meanwhile, according to someone familiar with the matter, Bloomberg claims that Celsius is the other organization involved.

The Attorney General also ordered three other crypto institutions to provide a slew of information regarding their activities. This includes describing each  “lending, loan, interest, or deposit/earnings product” that they offer.

New York’s Crypto Crackdown

For years, the Attorney General James has been suspicious of the dangers digital currencies pose to consumers. However, recently, the AG ejected Coinseed, a crypto exchange, from the state after unlawfully managing customers’ funds. The business had converted customers’ funds into Dogecoin without their permission while also trading unregistered securities.

 “My office is responsible for ensuring industry players do not take advantage of unsuspecting investors,” said AG James. “We’ve already taken action against a number of crypto platforms and coins that engaged in fraud or that illegally operated in New York.”

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As many know, New York State also targeted Tether, the largest stablecoin issuer, with a multimillion-dollar fine back in February. An investigation had found that not all of Tether’s reserves does not have the backing of US dollars.

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