New York has ordered two cryptocurrency lending platforms to cease activities and warned three others to hand over information about how their businesses operate, New York Attorney General (NYAG) Letitia James said in a Monday (Oct. 18) press release.
The two unnamed crypto lending platforms were ordered to stop all activity within a 10-day time period that related to the selling or offering of securities and commodities, according to a letter from James. The three other platforms were advised to provide information on their lending products, policies, procedures and clients in New York, per a separate letter from James.
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“My office is responsible for ensuring industry players do not take advantage of unsuspecting investors,” James said in the release. “We’ve already taken action against a number of crypto platforms and coins that engaged in fraud or that illegally operated in New York.”
She added that the actions send a message that the AG’s office “will not hesitate” to use any means necessary to ensure the laws are upheld, the release stated.
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The New York AG’s move follows a settlement with Bitfinex and Tether to pay $18.5 million in damages and comes weeks after James won a court order forcing the closure of cryptocurrency exchange Coinseed on allegations of defrauding investors out of more than $1 million.
Coinseed was fined $3 million and forced to shutter operations, per a separate press release.
“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,” James said in the Monday release.
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The order to shut down operations is supported by New York’s Martin Act, according to the release. As a remedial statute, the spirit of the Martin Act is to protect investors. As such, the definition of securities is wide-reaching.