California regulators order MyConstant to cease crypto-lending services

The California Department of Financial Protection and Innovation (DFPI) has ordered crypto lending platform MyConstant to cease providing plenty of its crypto-related merchandise over alleged state securities regulation violations.

The DFPI acknowledged in a press launch on Dec. 21 that it has ordered MyConstant to “desist and chorus” from providing its peer-to-peer mortgage brokering service and interest-bearing crypto asset accounts, which it says are in violation of the California Securities Law and California Consumer Financial Protection Law.

The DPFI alleged that MyConstant’s providing and promoting of its peer-to-peer lending service referred to as “Loan Matching Service” violates one of many state’s monetary codes.

It additionally alleged that MyConstant engaged in “unlicensed mortgage brokering,” because the platform induced lenders to lend with out correct licenses.

The regulators additionally had an issue with the crypto lender’s fastened interest-beating crypto asset merchandise, whereby a buyer deposits crypto belongings (akin to stablecoins and fiat) and are promised a hard and fast annual share curiosity return.

It mentioned that these have been examples the place MyConstant provided and bought unqualified, non-exempt securities.

In July, the regulator mentioned it was investigating a number of crypto curiosity account suppliers to decide whether or not they’re “violating legal guidelines underneath the Department’s jurisdiction.”

DFPI first introduced it was investigating MyConstant in a press launch on Dec. 5 stating that MyConstant is “not licensed” by DFPI to function in California. 

Related: California regulator investigating crypto curiosity accounts

The current motion comes solely a month after the California-based firm appeared to have fallen into arduous occasions, saying on Nov. 17 that “quickly deteriorating market circumstances” prompted heavy withdrawals and that it was “unable to proceed to function our enterprise as traditional.”

The platform on the time added that it had restricted its enterprise exercise, together with pausing withdrawals, and that: “No deposit or funding request will likely be processed presently.”

The platform has been offering customers with updates on its web site since then, together with an up to date plan despatched to customers on Dec. 15 which features a monetary overview, liquidation schedule, estimated restoration, and subsequent steps.

At the time, the platform mentioned it should proceed to administer its crypto-backed loans, together with making certain borrower compliance, processing mortgage repayments, returning debtors’ collateral (when their loans are paid in full), and liquidating debtors’ collateral within the occasion of default.