Because of potential breaches of state securities law, the California Department of Financial Protection and Innovation (DFPI) has given the order to the cryptocurrency lending platform MyConstant to stop selling a number of the cryptocurrency-related products it has available.
A press release dated December 21 stated that the DFPI had issued an order for MyConstant to stop offering its peer to peer loan brokering service and interest bearing crypto asset accounts. These services violate both the California Securities Law (and the California Consumer Financial Protection Law). According to the DFPI, it had issued the order.
The Department of Consumer and Financial Institutions charged MyConstant with violating one of the state’s financial rules by offering and selling its peer-to–peer lending business, Loan Matching Service.
MyConstant was also accused of participating in unlicensed loan brokering due to the fact that it incentivized lenders to lend without the necessary permits.
Also, the authorities had issues with fixed interest-beating crypto assets products of the crypto lender. These are products where a consumer deposits crypto assets, such as stablecoins. fiatThey are guaranteed an annual fixed percentage return on their investment.
These were instances of MyConstant selling and offering securities that did not meet the exemption criteria.
DFPI released a press release on December 5, indicating that MyConstant doesn’t have a license from DFPI for California operations. This was the first indication that DFPI was conducting an investigation on MyConstant.
The latest action comes less that a month after the California-based company announced that market conditions were rapidly deteriorating and it could no longer continue to run its business as usual. This announcement was made less than one month ago.
The platform said at that time that it had decreased the amount of commercial activity and suspended withdrawals. No requests for deposits or investments will be processed at this time.
When asked at the time, the platform stated that it would continue to administer its cryptocurrency-backed loans. The platform would ensure borrower compliance, process loan repayments, return borrowers’ collateral (when they have paid their entire loans), and liquidate borrowers’ collateral if they default on their loans.