Reports said that the New York Attorney General’s office has said it has ordered two crypto lending platforms, as of October 18, the names were still redacted, to “cease any and all such activity” relating to selling or offering securities and commodities within ten days.
It has been reported that Attorney General Letitia James also requested that three crypto businesses operating in New York, names redacted, provide details on their lending products, policies, procedures, clients in the state and other relevant information.
“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.”
However, the request for information from the three companies was not legally binding, but the NYAG's office left the door open to serving a subpoena in the letter. The order to shut down operations is backed by the state’s Martin Act, which grants the AG the enforcement power to bring civil or criminal charges against unregistered securities offerings.
The report said that James’ messages to the five crypto lending platforms come following the agreement of Bitfinex and Tether to pay $18.5 million in damages as part of a settlement with the NYAG office. The Attorney General later issued a warning to firms operating in the crypto industry: “Play by the rules or we will shut you down.” Under current New York state law, all crypto brokers, dealers, salespersons and investment advisers must register with the NYAG’s Investor Protection Bureau if they are doing business in the state.
Likewise, those without an exemption who fail to do so will be subject to civil and criminal penalties. In September, the New York Attorney General’s office ordered crypto investment platform Coinseed to close its doors after allegedly defrauding investors out of more than $1 million and selling an unlisted token.
Thus, Coinseed has been told to permanently halt its operations and pay $3 million in fines.