New York State Watchdog Orders Two Crypto Firms to Close Operations, Launching Further Investigations

The Office of the New York Attorney General (NYAG) has directed two unnamed crypto lending firms to halt their operations in the state. At the same time, further investigations were launched into three additional platforms.

Requesting Crypto Firms to Obey the Law

Crypto lending platforms offer interest-bearing accounts. The regulator said that it has often advised entities that operate within the state or is offering related products to New Yorkers must register with the Office of the Attorney General (OAG). However, a directive that these two crypto lending firms seem to have neglected.

“Cryptocurrency platforms must follow the law, just like everyone else, which is why we are now directing two crypto companies to shut down and forcing three more to answer questions immediately,” said Attorney General James. “My office is responsible for ensuring industry players do not take advantage of unsuspecting investors. We’ve already taken action against a number of crypto platforms and coins that engaged in fraud or that illegally operated in New York. Today’s actions build on that work and send a message that we will not hesitate to take whatever actions are necessary against any company that thinks they are above the law.”

While the NYAG has often depended on New York’s Martin Act to define what assets falls under the classification of security, it noted that “the nature and function of the most common virtual currency lending products or services demonstrate that they fall squarely within any of several categories of ‘security’ under the Martin Act.”

Sanctions too Draining to Incur

The NYAG under Letitia James’s management has handled defaulters to its extant laws with iron hands, such that the sanctions issued are often too draining to incur. A move has pushed many emerging cryptocurrency platforms to secure the appropriate licenses before operating in the state.

The overall target of the Attorney General’s Office is to offer reliable investor protection, irrespective of the market involved.