Two separate orders, requiring shutting down of two platforms, where crypto lending activities were going on, were issued under the auspices of Letitia James, the Attorney General for New York. It is assumed that the lending platforms such as Celsius Network and Nexo have been asked to shut down their operations forthwith, which fact is evident from the publications of letters at the AG’s website. In addition, the New York Attorney General’s office requires written responses from a further three crypto related platforms to detail their activities in the submissions.
In order to crackdown unregistered platforms of crypto activity, the operation has been led by Letitia James herself. James is the Attorney General for the New York and has been very active for the past many months against crypto trading platforms.
Under the laws of New York, any platform which engages in the lending services must obtain registration from Attorney General’s Office. In the absence of this mandatory registration, the lending company simply cannot operate any lending business nor offer its products to the New Yorkers.
The Attorney General’s Office under the auspices of James has identified at least 5 platforms doing crypto businesses. Two of these platforms are involved in lending business while the three are in the business of crypto trading. However, as regards the lending platforms, the AG Office has directed both of them to immediately shut down. It has been alleged by the Office that the two platforms are non-registered and are part of unlawful activities in the state. It is assumed that the two lending platforms ordered to shut down forthwith include platforms such as Celsius Network and Nexo.
In addition, three crypto trading platforms have been directed to cooperate. The Office has asked them specifically to submit their written responses about what type of crypto activities they are involved in. However, for the time being, they haven’t been stopped from rendering services and offering their products. But in case, their activities are found to be illegal by the Office, then they too will be asked to suspend their operations.
It has been noticed by AG Office that lending companies were in fact offering interest-bearing accounts to the customers in New York. However, if any interest is being obtained on the lending of cryptocurrencies, then the cryptocurrencies become “securities”. Therefore, the lending platforms cannot treat such cryptocurrencies other than “securities” which would otherwise be in violation of Martin Act, claimed James.
Even the Securities & Exchange Commission of the US takes crypto lending products as those of securities. This is why the SEC’s Chairman, Gary Gensler, had earlier sent a notice to Coinbase. In that notice Coinbase was warned to refrain from offering crypto lending services because they involve “securities”.
However, the names of the platforms from whom written clarification is required have not been disclosed by AG Office.