New York AG Directs 2 Crypto Lending Platforms to Cease Activities

Three other platforms were asked to provide information about their activities and products.

AccessTimeIconOct 18, 2021 at 3:35 p.m. UTC
Updated May 11, 2023 at 6:29 p.m. UTC

New York Attorney General Letitia James ordered two crypto lending platforms to cease their activities, which were determined to be unregistered and unlawful.

  • The platforms are in violation of offering securities and/or commodities without having registered with the Office of the Attorney General (OAG), according to a statement that didn’t identify the companies.
  • Three other platforms were asked to provide information about their activities and products. That includes data related to loan-to-value ratios, collateral options and payout processes, the minimum and maximum amount that can be borrowed, the lending rate and all fees payable.
  • The actions have been taken by the OAG in accordance with New York’s Martin Act, an anti-fraud law that gives the attorney general authority to investigate any company deemed to be trading securities in the state. For the purposes of the Martin Act, cryptocurrency is classed as a security, and therefore subject to its provisions, according to the statement.
  • Crypto platforms offering investors in New York a rate of return on the assets deposited with them must, therefore, register with the OAG.
  • In example letters attached to the release, names of the companies contacted were redacted. However, the file names associated with the letters initially identified Nexo and Celsius Network before being changed.
  • In an email, Nexo said it does not offer its Earn Product and Exchange in New York and blocks users based on internet address location. “It makes little sense to be receiving a C&D for something we are not offering in NY anyway. But we will engage with the NY AG as this is a clear case of mixing up the recipients of the letter.”
  • Celsius did not respond to a CoinDesk email on Monday seeking comment. But on Tuesday, the company said in a Medium post that it had not received a cease and desist order from New York. The company said that it had “received a request for information from New York authorities” and that it was in the process of providing regulators “with information about our business and offering.”

UPDATE (OCT. 18, 15:50 UTC): Adds file names, company contacts.

UPDATE (OCT. 18, 16:03 UTC): Adds response from Nexo.

UPDATE (OCT. 19, 20:56 UTC): Adds information about Celsius Medium post.

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Jamie Crawley

Jamie Crawley is a CoinDesk news reporter based in London.