New York Shuts Down 2 Crypto Firms for Unlawful Activities
- new york ordered the closure of two crypto lending platforms and led the investigation of three others.
- all companies, according to the announcement by new york attorney general letitia james, no they were named.
- “Cryptocurrency platforms need to comply with the law, just like everyone else,” James said.
new york attorney general letitia james on monday ordered the closure of two cryptocurrency lending platforms for “illegal activities” and led the investigation of three others.
All company names were redacted in the two letters published along with the press release. however, initial reports from the block showed that the cease and desist letter was marked with the title “nexus letter”, while a request for information was labeled “celsius letter” in the initial publication. alleged glitches have been ironed out and letters are now tagged with generic names.
Reading: York closes in on bitcoin crackdown
The two platforms, including nexo, were instructed to cease all activities within 10 days from October 18 for “illegally selling or offering for sale securities and/or raw materials,” as required by New York’s Martin Law, which requires bidders to register, the letter said.
nexus said it told a whistleblower via email that it’s not offering its earnings product in new york, so it “makes little sense” to receive a cease and desist for something they’re not offering. “We use IP-based geo-blocking,” she added.
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Meanwhile, the other three, including the celsius network, have been asked to provide more information on how they operate, such as what they do with cryptocurrencies deposited on their platforms. the details are to include all wallet addresses and entities providing custody, according to a separate letter. the attorney general also asked for clarification on whether the platforms accept fiat currency or tether as collateral.
celsius in October just raised $400 million in its latest fundraising round, bringing its valuation to $3 billion. The latest cash infusion comes as Texas, New Jersey, Alabama and Kentucky have cracked down on the company’s “interest earnings accounts.” every state except kentucky has also gone after the blockfi crypto lending firm earlier this year.
“Cryptocurrency platforms must comply with the law, just like everyone else,” James said in a statement. “My office is responsible for ensuring that industry players do not take advantage of unsuspecting investors.”
He also took a detailed look at the state’s martin law, which covers a broad list of instruments that must be declared as securities. this includes “any stock, bond, promissory note…or negotiable document of title, or foreign currency warrants, call options, or options, henceforth referred to as securities or securities.”
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“The nature and function of the most common virtual currency lending products or services demonstrate that they fall squarely within any one of several ‘security’ categories under the Martin Act,” the statement said.
The state attorney general’s office has stepped up its crackdown on virtual currencies. For example, cryptocurrency trading platform Coinseed announced in June that it was shutting down after James sued it in February for selling “worthless” tokens and moving investors’ money without permission.
Cryptocurrencies have been at the center of a tense period as global regulators pool their minds on how best to increase oversight of the $2.6 billion industry.
Multiple efforts have been imposed to control various products. Still, the digital asset market capitalization continues to rise, now fueled by an impending bitcoin futures exchange-traded fund set to begin trading this week.
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