California regulators order MyConstant to cease crypto-lending services

The California Department of Financial Protection and Innovation (DFPI) has ordered crypto lending level MyConstant to cease offering a fig of its crypto-related products implicit alleged authorities securities instrumentality violations.

The DFPI stated successful a property merchandise connected Dec. 21 that it has ordered MyConstant to “desist and refrain” from offering its peer-to-peer indebtedness brokering work and interest-bearing crypto plus accounts, which it says are successful usurpation of the California Securities Law and California Consumer Financial Protection Law.

The DPFI alleged that MyConstant’s offering and selling of its peer-to-peer lending work called “Loan Matching Service” violates 1 of the state’s fiscal codes.

It besides alleged that MyConstant engaged successful “unlicensed indebtedness brokering,” arsenic the level induced lenders to lend without due licenses.

The regulators besides had a occupation with the crypto lender’s fixed interest-beating crypto plus products, whereby a lawsuit deposits crypto assets (such arsenic stablecoins and fiat) and are promised a fixed yearly percent involvement return.

It said that these were examples wherever MyConstant offered and sold unqualified, non-exempt securities.

In July, the regulator said it was investigating multiple crypto involvement relationship providers to find whether they are “violating laws nether the Department’s jurisdiction.”

DFPI archetypal announced it was investigating MyConstant successful a property merchandise connected Dec. 5 stating that MyConstant is “not licensed” by DFPI to run successful California. 

Related: California regulator investigating crypto involvement accounts

The caller enactment comes lone a period aft the California-based institution appeared to person fallen into hard times, announcing connected Nov. 17 that “rapidly deteriorating marketplace conditions” prompted dense withdrawals and that it was “unable to proceed to run our concern arsenic usual.”

The level astatine the clip added that it had constricted its concern activity, including pausing withdrawals, and that: “No deposit oregon concern petition volition beryllium processed astatine this time.”

The level has been providing users with updates connected its website since then, including an updated program sent to users connected Dec. 15 which includes a fiscal overview, liquidation schedule, estimated recovery, and adjacent steps.

At the time, the level said it volition proceed to administer its crypto-backed loans, including ensuring borrower compliance, processing indebtedness repayments, returning borrowers' collateral (when their loans are paid successful full), and liquidating borrowers' collateral successful the lawsuit of default.