In July, the California DFPI issued a warning that it will be cracking down on companies offering cryptocurrency interest accounts in the state.
Due to potential violations of state securities law, the California Department of Financial Protection and Innovation (DFPI) has ordered the cryptocurrency lending platform MyConstant to stop marketing several of its cryptocurrency-related products.
The California Securities Law and the California Consumer Financial Protection Law, according to the DFPI, have been broken by MyConstant’s provision of interest-bearing crypto asset accounts and peer-to-peer loan brokering services. The DFPI ordered MyConstant to “desist and refrain” from providing these services.
The DPFI claimed that one of the state’s financial rules was broken by MyConstant’s providing and selling of its peer-to-peer loan business known as “Loan Matching Service.”
Additionally, it claimed that MyConstant engaged in “unlicensed loan brokering” by encouraging lenders to make loans without the necessary authorizations.
The crypto lender’s fixed interest-beating crypto asset products, in which a customer deposits crypto assets (such as stablecoins and fiat) and is guaranteed a certain annual percentage interest return, were equally problematic to the regulators.
It claimed that in these instances, MyConstant offered and sold non-exempt unqualified securities.
The regulator announced in July that it was looking into a number of providers of cryptocurrency interest accounts to see if they were “violating regulations under the Department’s jurisdiction.”
Crypto Liquidating :
MyConstant is “not licenced” by DFPI to conduct business in California, according to a news release the agency issued on December 5 that first revealed its investigation against the company.
The company, which is situated in California, appeared to be in financial trouble just a month prior to the recent action, claiming on November 17 that “rapidly deteriorating market circumstances” had led to significant withdrawals and that it was “unable to continue to conduct our business as usual.”
At the time, the platform also stated that it has restricted its business operations, stopping withdrawals in the process, and that “No deposit or investment request would be accepted at this time.”
Since then, the platform has been updating customers on its website, including a revised plan that was delivered to consumers on December 15 and includes a financial overview, a schedule for liquidation, a projected recovery, and the next measures.
The platform stated at the time that it would keep managing its crypto-backed loans, including monitoring borrower compliance, handling loan repayments, releasing collateral to borrowers after loans were fully repaid, and liquidating collateral in the event of failure.