Law and Legislation

New York Attorney General Orders Closure Of Two Crypto Firms & Investigating 3rd One.

The New York Attorney General’s office has accused two unidentified crypto lending platforms in the state of engaging in illegal activities and has demanded the third one to disclose information about their operations.

The New York Attorney General’s office said on Monday that it has ordered two crypto lending platforms — the identities of which were deleted at the time of publishing — to “stop any and all such conduct” connected to selling or providing securities and commodities within 10 days. Attorney General Letitia James also asked three crypto firms based in New York — whose names have been deleted — to submit information on their loan products, rules, processes, clients in the state, and other pertinent information.

“It is my office’s responsibility to ensure that industry players do not exploit inexperienced investors, “James said. “We’ve previously taken action against a number of cryptocurrency businesses and currencies in New York that has engaged in fraudulent activity or functioned illegally. Today’s actions build on that effort and send a message to any company that feels it is above the law that we will not hesitate to take whatever steps are necessary to protect them.”

Although the request for information from the three firms was not legally enforceable, the NYAG’s office did leave the possibility of issuing a subpoena in the letter. The state’s Martin Act, which gives the AG the authority to file civil or criminal charges against unregistered securities offers, supports the decision to shut down operations.

Following Bitfinex and Tether’s agreement to pay $18.5 million in damages as part of a deal with the NYAG office, James sent communications to the five crypto lending websites. “Play by the rules or we will shut you down,” the Attorney General warned companies in the crypto business afterward.

If they do business in New York, all crypto brokers, dealers, salespeople, and investment advisers must register with the New York Attorney General’s Investor Protection Bureau. Those who do not comply, even if they have an exception, will face civil and criminal consequences.

After allegedly scamming investors out of more than $1 million and selling an unlisted coin, the New York Attorney General’s office ordered crypto investment platform Coinseed to close its operations in September. Coinseed has been ordered to cease operations forever and pay $3 million in fines.

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