New York state Attorney General Letitia James has ordered two “unregistered crypto lending platforms” — one of which has appeared to be Nexo — to cease operations in New York, and requested another three platforms to provide information about their activities.
- James said in a press release published on Monday: “Cryptocurrency platforms must follow the law, just like everyone else, which is why we are now directing two crypto companies to shut down and forcing three more to answer questions immediately.”
- The attorney general said the nature and function of the most common virtual currency lending products or services demonstrate that they fall squarely within any of several categories of “security” under the Martin Act, and that the virtual currency lending products at issue in today’s actions “promise a fixed or variable rate of return to investors, and claim to deliver those returns by, among other things, trading with, or further lending those virtual assets.”
- James did not specify the names of the platforms in the presser, but Nexo has released a statement about the matter. Nexo told Forkast.News in an emailed response: “Nexo is not offering its Earn Product and Exchange in New York, so it makes little sense to be receiving a cease-and-desist for something we are not offering in N.Y. anyway.”
- “Still, we will engage with the NYAG and seek clarity with regards to what appears to be a case of mixing up the recipients of the letter,” Nexo said.
- Earlier this year, James also went after stablecoin operator Tether and its affiliated crypto exchange Bitfinex. In February, they settled an investigation for US$18.5 million with the NYAG’s office that examined whether Tether and Bitfinex sought to cover up a US$850 million loss in funds. As part of the settlement agreement, neither company admitted wrongdoing but were required to submit quarterly reports on their reserves for two years.
- Just last week, Tether, the issuer of the world’s most popular stablecoin USDT, was fined US$41 million by the U.S. Commodity Futures Trading Commission (CFTC) over “untrue or misleading” claims that its USDT stablecoin was fully backed by corresponding fiat currencies.