The California DFPI warned in July that it would take action against providers of crypto interest accounts in the state.
The California Department of Financial Protection and Innovation (DFPI) has ordered crypto lending platform MyConstant to stop offering a number of its crypto-related products due to alleged securities law violations. state securities.
The DFPI said in a Dec. 21 press release that it ordered MyConstant to “cease and desist” from its peer-to-peer lending service and interest-bearing crypto wealth accounts, which he says violates the California Securities Act and the State of California. Consumer Financial Protection Act.
DPFI alleged that MyConstant’s offering and selling of its peer-to-peer lending service called Loan Matching Service violated one of the state’s finance laws.
It has also been alleged that MyConstant was involved in “unlicensed loan brokerage” as the platform tricked lenders into lending without the proper licenses.
Regulators have also had an issue with the crypto lender’s fixed income crypto asset products, where a client deposits crypto assets (such as stablecoins and fiat) and is promised a fixed annual interest rate.
He said these were examples of MyConstant offering and selling unrestricted and non-exempt titles.
In July, the regulator said it was investigating multiple crypto interest account providers to determine if they “violated laws within the jurisdiction of the department.”
DFPI first announced it was investigating MyConstant in a December 5 press release, stating that MyConstant was “not licensed to operate in California” by DFPI.
Related: California Regulator Investigating Crypto Interest Accounts
The latest action comes just a month after the California-based company appeared to be going through tough times, announcing on Nov. 17 that “rapidly deteriorating market conditions” led to significant buybacks and that it “has not been able to continue our business as usual.” .”
The platform then added that it had restricted its operations, including suspending withdrawals, and that “no deposit or investment requests are being processed at this time”.
Since then, the platform has been making updates available to users on its website, including an updated plan sent to users on December 15, which includes a financial overview, liquidation plan, estimated recovery and next steps.
At the time, the platform said it would continue to manage its crypto loans, including ensuring borrower compliance, processing loan repayments, returning borrower collateral (when their loans are fully reimbursed) and by liquidating the borrower’s guarantee in the case of Original.