Due to potential violations of state securities law, the California Department of Financial Protection and Innovation (DFPI) has ordered cryptocurrency lending platform MyConstant to stop selling a number of cryptocurrency-related products it makes available to it. .
In a press release dated Dec. 21, the DFPI stated that it had issued an order to MyConstant to cease and desist from offering its peer-to-peer loan brokerage service and interest-bearing crypto asset accounts, which, according to the DFPI. , violate the California Securities Law and the California Consumer Financial Protection Act. The DFPI stated that it had issued the order.
The Department of Consumer and Financial Institutions (DPFI) accused MyConstant of violating one of the state’s financial rules when it offered and sold its peer-to-peer lending business known as Loan Matching Service.
It was also claimed that MyConstant was involved in brokering unauthorized loans, as the platform incentivized lenders to lend without proper permissions.
Authorities also had a problem with the cryptocurrency lender’s fixed-rate crypto asset products. These are the products where a consumer deposits crypto assets (such as stablecoins and fiat money) and is guaranteed a fixed APR on their investment.
These cases were said to be examples of MyConstant offering and selling securities that did not qualify for an exemption.
DFPI issued a press release on December 5 stating that MyConstant does not have a license from DFPI to operate in California. This was the first announcement that DFPI was conducting an investigation into MyConstant.
The recent action comes less than a month after the California-based company appeared to have fallen on hard times, announcing on November 17 that rapidly deteriorating market conditions led to heavy withdrawals and that it could no longer operate our business. as usual. The recent action comes less than a month after that announcement.
At the time, the platform also said that it had reduced the amount of trading activity it was conducting, including suspending withdrawals, and that no requests for deposits or investments would be handled at this time.
When asked at the time, the platform stated that it would continue to manage its crypto-backed loans. This would include ensuring borrower compliance, processing loan repayments, returning borrower collateral (when their loans are repaid in full), and liquidating borrower collateral in the event borrowers default on their loans.