A first version of the documents highlights 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 digital currency lending platforms that are not properly registered in the state to stop every single activity
In a statement that arrived in October 18, the New York Attorney General (NYAG) ordered the immediate cease and desist of two firms offering crypto loans. The announcement also needs three other companies to bring information about their activities and products, including corporate ownership and handling of user deposits.
James said in the statement that Cryptocurrency platforms must comply with the law, just like everyone else, so the two cryptocurrency companies close and force three others to immediately respond to questions.
New York Joins Crypto-Lending Crackdown
The Office of the Attorney General (OAG) has catalogued cryptocurrency lending platforms as essentially interest accounts that offer investors a rate of return on their digital currencies, and these services fall into the category of values, according to the Martin Law of New York.
Passed in 1921, the Martin Act is a US anti-fraud law that gives the Attorney General the authority to investigate any company deemed to be trading securities in the state.
NYAG said that the virtual currency loan products in question in today’s stocks promise a fixed rate of return to investors and claim to offer those returns, among other things, by trading more of those virtual assets.
According to the statement, the firms would offer 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 an early version of the cease and desist letter retained the name Nexo Letter, while the request for information got labeled in the name of Celsius Letter. The names might add two of the largest crypto lending platforms in the United States of America.
The cease and desist letter issued to Nexo gives that firm, and the other unidentified entity, a period of ten days to stop each and every one of these activities and let the Attorney General know that the activity has already stopped.
Cryptocurrency Loans Under Scrutiny in the US
For its part, the letter to Celsius was more modest, giving the company until November 1 to bring information on its ownership structure, its investment strategy and its means of custody for crypto deposits. The other three firms that received letters from NYAG remain without identification.
Nexo also assured that it does not offer its loan product in New York and that it takes the task of blocking users from that location rooted on their Internet address.
The New York authority’s actions arrived at a time when several US regulators face a crackdown on crypto-lending companies. During this year, the cryptocurrency trading and lending platform BlockFi experienced a ceasefire order from the New Jersey Office of Securities.
By: Jenson Nuñez
