The California Department of Financial Protection and Innovation (DFPI) has ordered the cryptocurrency lending platform MyConstant to halt the sale of its various cryptocurrency products due to alleged violations of state securities laws.
The DFPI alleges that MyConstant’s offering of interest-bearing cryptocurrency accounts and peer-to-peer loan brokering services violated the California Securities Law and the California Consumer Financial Protection Law. As such, the DFPI has ordered MyConstant to “desist and refrain” from providing these services.
DFPI stated in the press release:
“The Department of Financial Protection and Innovation today announced that it has ordered CONST LLC (doing business as “MyConstant”) to desist and refrain from violating the California Securities Law and California Consumer Financial Protection Law.”
MyConstant operated an online marketplace that provided a variety of cryptocurrency-related products and services, including a peer-to-peer loan brokering service. Through this service, MyConstant facilitated loans between users, claiming that the borrowers’ crypto assets served as collateral for the loans.
The company offered two interest-bearing accounts: one for crypto assets with a guaranteed fixed annual yield and the other for fiat assets with a guaranteed fixed annual percentage return.
The regulators also took issue with MyConstant’s fixed interest-bearing crypto asset products, which promised a predetermined annual percentage interest return in exchange for customers depositing crypto assets, including stablecoins and fiat.
A month ago, MyConstant announced that the company would no longer be able to continue normal operations due to rapidly deteriorating market conditions.
In a statement on December 5, the DFPI reported that MyConstant had posted on its website that it had suspended user deposits and withdrawals due to “the collapses of several cryptocurrencies so far this year and the rapidly deteriorating market conditions.”
On November 25, 2022, MyConstant informed clients that it would be “implementing an orderly liquidation to maximize and expedite customer recoveries.”
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