New York Attorney General Letitia James announced on October 18 that she had ordered the shutdown of an unidentified group of cryptocurrency lending platforms operating in the state.
According to an official press release, the companies are acting in violation of the provisions of general business law § 352 et seq. – better known as “Martin’s law”.
Ms James argues that cryptocurrency lending platforms are “interest-bearing accounts” and therefore must register with the Attorney General’s Office (OAG) in order to operate in New York.
Cryptocurrency Exchanges Are Not Above The Law
The New York attorney’s office did not specify the companies involved; however, the press release reveals that the attorney general issued five notifications to a number of platforms operating in New York. For some, it was an order to cease and desist. From others, she asked for information before taking further action.
“Cryptocurrency platforms must follow the law, like everyone else, which is why we are now ordering two crypto companies to shut down and forcing three more to answer questions immediately.”
Among a series of 14 requests, the Attorney General asked the cryptocurrency firms for the username / customer names, user IDs, date, time, IP addresses and any other information captured of any customer. can connect from New York.
Ms James also requested personal data of users with unverified accounts, a breakdown of KYC proceedings, the jurisdictions they provide services to and legal documents.
New York: the final boss of the Crypto-Verse
New York is a finance-related business paradise. Yet it also perhaps has the state with the worst reputation in all of the United States when it comes to the legal framework and its relationship to cryptocurrencies.
The infamous Bitlicense is known to make running a business associated with cryptocurrency trading almost prohibitive and complex. Its creator, Benjamin Lawsky, New York’s first superintendent of financial services, stepped down to found a successful consulting firm that provided services to those who wanted to get, you guessed it, a Bit license.
His elimination was one of the promises of Democratic pre-presidential candidate (who is now running for mayor of New York) Andrew Yang. Still, it looks like current US President Democrat Joe Biden doesn’t share the same vision and has appointed a cabinet more geared towards controlling the industry.
Cryptocurrency lending service initiatives have not had a good year in America. Even Coinbase, the largest cryptocurrency exchange in the United States, couldn’t keep up with a cryptocurrency lending service that aimed to outperform high-yield accounts offered by traditional banks.
Likewise, other cryptocurrency lending services like Blockfi and Celsius have been ordered to shut down in several US states.
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