Letitia James, New York’s Attorney General, announced that she had ordered the shut down of an unidentified group operating in cryptocurrency lending platforms in the state on October 18.
According to an official press release the companies will be violating the stipulations in General Business Law SS352 et seq. Also known as the “Martin Act”
Ms. James claims that cryptocurrency lending platforms can be considered “interest-bearing” accounts and must therefore register with the Office of the Attorney General in New York.
Cryptocurrency Exchanges are Not Above the Law
Although the Office of the New York attorney did not identify the companies affected, the press release states that five notifications were issued by the Attorney General to various platforms in New York. Some people thought it was a cease-and-desist order. Others saw it as a cease and desist order. She asked for more information before proceeding with any further actions.
“Cryptocurrency platforms have to follow the law, just as everyone else. That is why we are now directing 2 crypto companies to close down and forcing 3 more to answer any questions immediately.”
Attorney General demanded 14 items from cryptocurrency businesses: user/client names and user IDs, date, times, IP addresses, and any other information that could be used to connect clients to New York.
Ms James also requested personal data from users with unverified accounts, breakdown KYC procedures, jurisdictions where they offer services, as well as legal documents.
New York: The Crypto-Verse’s Final Boss
New York is a safe haven for financial-related businesses. It has the worst reputation for cryptocurrencies and the legal framework.
It is well-known that Bitlicense makes it difficult and prohibitively expensive to run a business related to the exchange of cryptocurrency. Benjamin Lawsky, New York’s first Superintendent for Financial Services, was its creator. He then founded a successful consulting company that offered services to anyone interested in obtaining a Bitlicense.
Andrew Yang, Democrat presidential candidate (who is now running for New York City mayor), promised to eliminate it. Democrat Joe Biden is not sharing the same vision. He has instead appointed a cabinet more focused on controlling the industry.
American cryptocurrency lending services have had a difficult year. Coinbase, America’s largest cryptocurrency exchange, couldn’t keep up with a crypto lending service that sought to surpass high-yield traditional bank accounts.
Similar to this, several US states have ordered the shutdown of other cryptocurrency lending services, such as Blockfi or Celsius.
Marla Brooks – Financial Analysis
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