New York attorney general demands shutdown of unregistered lending platforms

New York attorney general bans two unregistered lending platforms

The American regulation seems to want to crack down on platforms offering to generate passive income in cryptocurrencies. It is precisely in New York State that an important step was taken on Monday, with a ban on two of these platforms. Three others are the subject of an in-depth investigation.

The New York attorney general’s office did not name the two platforms. However, despite the anonymity of the letters sent by the Attorney General (the first information and the second requesting cessation of activity), rumors suggest that it would be two of the most important in the sector, Celsius Network and Nexo. At this time, no information has filtered out on the other three that are the subject of an information request.

The termination request letter gives the two platforms ten days to shut down their services in New York State. This would prevent any legal action by the authorities against Celsius and Nexo, if these two companies are indeed those targeted by the letters.

πŸ‘‰ To read – The valuation of Celsius Network increases by 2,400% after a new fundraising

An injunction to cease activity for non-compliance with the legislation in force

In a statement, the prosecutor’s office explicitly targets platforms that are not registered and would therefore be at odds with the legislation in force.

The New York’s Martin Act of 1921 is invoked, which specifies that any company promoting interest-bearing accounts complies with the provisions relating to financial securities.

However, the Martin Act allows the attorney’s office to investigate potential or proven fraud in the area of ​​financial securities. Thus, if the platforms indeed offer interest-bearing accounts, which would de facto be assimilated to financial securities, the registration of said platforms is compulsory.

To date, the activity of Celsius Network, Nexo and their competitors is not clearly defined by law. While it is true that they offer remunerated accounts in cryptocurrencies, the latter being their main selling point, the legislation does not affirm or deny that these remunerated accounts are assimilated to financial securities.

πŸ‘‰ To read – Bitfinex, Tether (USDT) strike deal with New York State and pay $ 18.5 million fine

Lending platforms in the sights of the American authorities

This is not the first time that these platforms have been slapped on the fingers by the American authorities. Last July, BlockFi had drawn the wrath of the financial authorities of four American states, in particular because of a lack of registration.

Just a few weeks ago, it was the SEC, the US federal financial regulator, that rolled back Coinbase for its Coinbase Lend project. In general, Gary Gensler, director of the SEC believes that platforms will not be able to survive without regulation.

To return to the decision of the day before, at the moment, many unknowns remain on this injunction of the office of the attorney general of New York.

Will the targeted platforms really cease their activity? Nexo has reportedly previously indicated that its products have never been accessible in New York State. The following days will be decisive and we will keep you informed.

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About the author: Benjamin Allouch

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Formerly a lawyer specializing in personal data and digital law, I quickly became interested in Bitcoin, blockchain technology and their legal implications. I am now an independent consultant and writer in the field of cryptocurrencies and blockchain.
All articles by Benjamin Allouch.

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