Letitia James, the New York (NY) Attorney General (AG) has directed 2 cryptocurrency lending platforms towards closing down their operations. The NYAG has also instructed, via a letter, 3 other platforms to participate in a Q&A pertaining to their operations. The cease and desist (C&D) order letters, now redacted, per the AG’s website, suggested the two platforms to be Nexo and Celsius Network.
Per the argument by NYAG James, virtual currency lending products (VCLPs) are termed as securities within the Martin Act of NY State. In the State of New York (NY), lending platforms need to get registered with the Office of the Attorney General (OAG) to conduct their operations or serve the NY residents. In a bid to safeguard and protect NY investors, the NYAG wants to prevent “high-risk currency schemes.”
Per NYAG’s official announcement on the website, AG James said:
Cryptocurrency platforms must follow the law, just like everyone else, which is why we are now directing two crypto companies to shut down and forcing three more to answer questions immediately.
My office is responsible for ensuring industry players do not take advantage of unsuspecting investors. We’ve already taken action against a number of crypto platforms and coins that engaged in fraud or that illegally operated in New York. Today’s actions build on that work and send a message that we will not hesitate to take whatever actions are necessary against any company that thinks they are above the law.
The VCLPs in question, per their activities, tend to “promise a fixed or variable rate of return to investors.” These entities also “claim to deliver those returns by, among other things, trading with, or further lending those virtual assets.” This prompted the NYAG to act with those actions stated above and also conduct additional investigations.