California’s DFPI asks crypto lender MyConstant to stop offering its services
- DFPI accuses MyConstant’s peer-to-peer lending services and interest-bearing accounts of violating California Securities Law and California Consumer Financial Protection Law.
- DFPI argues that MyConstant’s “Loan Matching Service” violated one of the state’s financial codes.
Regulatory agencies’ crackdown on crypto firms has increased in recent days. The California Department of Financial Protection and Innovation (DFPI) has ordered crypto lender MyConstant to stop offering crypto-related services.
In its official statement, DFPI accuses MyConstant’s peer-to-peer lending services and interest-bearing accounts of violating California Securities Law and California Consumer Financial Protection Law.
Further, the regulatory watchdog accused MyConstant of “unlicensed loan brokering,” as the platform urged lenders to lend without offering proper licenses. DFPI states that the crypto lender’s “Loan Matching Service” offering violated one of the state’s financial codes.
DFPI started probing MyConstant in early December following the crypto lender informing customers that it intends to “implement an orderly liquidation to maximize and expedite customer recoveries.” In early December, DFPI argued that MyConstant is not licensed to operate in California by the agency.
DFPI also found suspicious the design in which a customer deposits crypto assets and is promised a fixed annual percentage interest return as part of MyConstant’s crypto lending services. The regulator added that this was a major reason for accusing MyConstant of offering and selling unqualified, non-exempt securities.
In recent months, California’s DFPI has increased its watch over crypto lending services to see if they violate any state laws. In July, DFPI stated it was investigating several crypto interest account providers to determine whether they are “violating laws under the Department’s jurisdiction.”
DFPI is of the opinion that crypto-interest account providers “are not governed by the same rules and protections as banks and credit unions.” California’s DFPI earlier this year issued cease and desist orders to BlockFi and Voyager to stop their offerings in California while accusing them of providing unregistered securities,
MyConstant is a P2P lending platform founded in 2019 that offers investments in crypto-backed loans. Last month, the crypto firm raising red flags abruptly paused consumer deposits and withdrawals, citing “the collapses of several cryptocurrencies so far this year and the rapidly deteriorating market conditions.”