California regulators order MyConstant to suspend crypto lending services

The California Department of Financial Protection and Innovation (DFPI) has ordered crypto lending platform MyConstant to stop offering several of its crypto products due to alleged violations of state securities law. 

  DFPI said in a Dec. 21 press release  that it  ordered MyConstant to "cease and desist" from offering  peer-to-peer brokerage and interest-bearing crypto  accounts, which it says violate California Securities Law and the California Consumer  Protection Act. the law 
  DPFI claimed that a peer-to-peer loan service offered and sold by MyConstant called "Loan Origination Service" violates one of the country's financial codes. 

 He also claimed that MyConstant was engaged in "unlicensed lending" because the platform allowed lenders to provide loans without proper licenses. 

 Regulators also took issue with the crypto lender's crypto fixed rate products, where the customer deposits crypto assets (such as stablecoins and fiat) and is promised a fixed annual  return. 

 He said  these were examples of the offering and selling of MyConstant securities that were not approved. 

 The regulator announced in July that it was investigating several providers of crypto-interest accounts to determine whether they violated laws under the department's jurisdiction. 

 DFPI first announced the MyConstant investigation in a Dec. 5 press release  that said DFPI did not have MyConstant licensed to operate in California. 

 The recent action comes just a month after the California-based company appeared to be facing tough times, announcing in November. 17 that "rapidly deteriorating market conditions" resulted in large-scale layoffs and that it was "unable to continue  our normal operations." The platform added at the time  that it had limited its trading operations, including suspending withdrawals, and that: "Deposit or investment requests are currently not being processed." 

 The platform has since provided users with updates on its website, including an updated plan sent to users on December 15 that includes a financial overview, liquidation plan, estimated earnings and next steps. 

 Alusta said at the time that it would continue to manage its crypto loans, including  borrower compliance, handling loan repayments, returning the borrower's collateral (if the loans are repaid in full) and, in that case, liquidating the borrower's collateral . originally

Also Read : Token Potential 2023

Source : cointelegraph

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