California Bans Crypto Lending From My Constant
2022.12.23 12:40
California Bans Crypto Lending From My Constant
Budrigannews.com – Due to alleged violations of state securities laws, the crypto lending platform MyConstant has been directed by the California Department of Financial Protection and Innovation (DFPI) to cease offering a number of its crypto-related products.
The DFPI issued a press release on December 21 stating that it has ordered MyConstant to “desist and refrain” from offering its interest-bearing crypto asset accounts and peer-to-peer loan brokering service, which it claims are in violation of the California Securities Law and California Consumer Financial Protection Law.
MyConstant’s “Loan Matching Service,” a peer-to-peer lending service, was allegedly sold and offered for sale in violation of one of the state’s financial codes, according to the DPFI.
It also said that MyConstant did “unlicensed loan brokering” because the platform got lenders to lend money without having the right licenses.
The fixed interest-beating crypto asset products offered by the crypto lender, in which customers deposit crypto assets (such as stablecoins and fiat) and are promised a fixed annual percentage interest return, also caused issues for the regulators.
It stated that these were instances of MyConstant offering and selling non-exempt unqualified securities.
The regulator said in July that it was looking into several providers of crypto interest accounts to see if they were “violating laws under the Department’s jurisdiction.”
On December 5, DFPI issued a press release in which it stated that MyConstant is “not licensed” by DFPI to operate in California.
The recent action comes just a month after the California-based company made the announcement on November 17 that it was “unable to continue to operate our business as usual” due to “rapidly deteriorating market conditions” and heavy withdrawals.
At the time, the platform stated that “No deposit or investment request will be processed at this time” and that it had restricted its business activities, including pausing withdrawals.
More FTX turned to judge for help
Since then, the platform has been posting updates to its website for its users. On December 15, a new plan with a financial overview, liquidation schedule, estimated recovery, and next steps was sent to users.
The platform stated at the time that it would continue to manage its crypto-backed loans, which would include monitoring borrower compliance, processing loan repayments, returning borrower collateral (when their loans are paid in full), and liquidating borrower collateral in the event of default.
