NYAG Directs Two Crypto Lending Firms To Cease Operations In New York

New York Attorney General Letitia James has directed two unregistered crypto lending platforms to cease their unlawful operations in New York as part of new efforts to protect New York investors from exploitation by high-risk virtual currency schemes.

Additionally, The AG has directed three other platforms to immediately provide information about their activities and products.

These virtual or crypto currency lending platforms are essentially interest-bearing accounts that offer investors a fixed or variable rate of return on virtual currencies that are deposited with them. However, they must register with the Office of the Attorney General (OAG) if they are operating within the state or offering their products to New Yorkers, unless exempted.

The announcement follows previous warnings to virtual currency platforms that unlawful activity will not be tolerated in New York.

“My office is responsible for ensuring industry players do not take advantage of unsuspecting investors. We’ve already taken action against a number of crypto platforms and coins that engaged in fraud or that illegally operated in New York,” said Attorney General James.

In March 2021, the OAG specifically notified the industry that those dealing in virtual currencies directly (such as trading platforms) must register with the Investor Protection Bureau, unless exempted.

Attorney General James has been very active this year and has not hesitated to hold cryptocurrency trading platforms and token issuers accountable. Last month, she shut down cryptocurrency trading platform Coinseed, Inc. after she filed a lawsuit against the company earlier this year.

On the same day, she secured a recovery of nearly half a billion dollars unlawfully obtained from investors who financially backed GTV Media Group, Inc. and its parent company, Saraca Media Group, Inc.

In addition to unlawfully selling stocks, the company was selling two digital instruments promoted as cryptocurrencies without registering in New York State.

In February, Attorney General James settled with Bitfinex, Tether, and related entities to end all of their trading activity in the state of New York, also imposing an $18.5 million penalty on the companies.

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