New York Attorney General (NYAG) Letitia James has issued a stern warning to all unregistered cryptocurrency lending platforms operating in the state.
In an October 19 press release, NYAG ordered the immediate shutdown of an unidentified group of cryptocurrency lending platforms, asserting that they are operating contrary to the stipulations of General Business Law § 352 et seq, popularly known as the “Martin Act.”
In her verdict, Ms. James argues that cryptocurrency lending platforms are “interest-bearing accounts” and therefore must register with the Office of the Attorney General (OAG) to gain operating licenses in New York.
The Office of the New York Attorney did not reveal the affected firms. But, the press release has revealed that Ms. James issued five warning alerts to several lending platforms operating in the state. To some, the OAG issued a cease and desist order, while others were required to submit vital information before further legal action:
“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.”
Among the 14 requirements, the Attorney General ordered the cryptocurrency companies to provide user/client names, user IDs, dates, times, IP addresses, and any other captured information of any client who connects the platform from New York.
Moreover, NYAG also demanded the personal data of all users with unverified accounts, breakdown of KYC procedures, operating licenses, and other legal documents.
“Worst Reputations” But Still “Haven For Cryptos”
Although New York has repeatedly intensified worst reputation amid the legal framework and its relationship with cryptocurrency, the carbon green state remains a haven for most finance-related businesses.
The infamous Bitlicense is a perfect example of intensified crypto reputation in New York. Bitlicense legislation almost made it prohibitively expensive and complex to operate a crypto-related business in the state.
Benjamin Lawsky, the Bitlicense creator and first Superintendent of Financial Services, unceremoniously left his position to form a consulting firm that provides services to those interested in a similar Bitlicense.
But, Andrew Yang, the Democratic aspirant for New York City Mayor, has vowed to eliminate the Bitlicense legislation once he assumes office. Still, it is clear that the city boss aspirants and the current President of the United States, Democrat Joe Biden, do not share the same vision despite being Democrats.
Unfortunately, the President has appointed a cabinet that is more oriented to control the nascent crypto sector. In a related report, Coinbase, the biggest United States crypto exchange in volume, has also faced the wrath of OAG over its lending service it aimed to launch to replace high-yield accounts currently offered by traditional banks.
Similarly, other cryptocurrency lending platforms such as Blockfi and Celsius have already received shutdown-order in the several US States.