What You Need to Know
- Regulators in several states are taking aim at crypto lending firms, which have rapidly gathered tens of billions of dollars.
- The attorney general's office said the firms had failed to register as required.
- The co-founder of one of the firms that was ordered to shut down says the firm doesn't do business in New York.
New York Attorney General Letitia James said she ordered two cryptocurrency lending platforms to stop operating in the state, and sent three other platforms letters with questions about their operations.
Though James did not name the firms, Nexo Financial LLC in a statement confirmed it had received a cease-and-desist letter, while a person familiar with the matter said Celsius Network LLC was among the firms that received a request for more information.
“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,” James said in a press release Monday.
The release states that virtual currency lending products “fall squarely within any of several categories of ‘security’ under the Martin Act,” meaning they must be registered with the attorney general’s office.
The attorney general’s office posted two letters on its website in conjunction with the release. Though the office redacted the names in the letters, the one requesting more information contained “Celsius letter” in the title and the other ordering the companies to cease and desist contained “Nexo letter.” A person familiar with the matter confirmed Celsius received the information request, and Nexo confirmed it had received a cease-and-desist letter.
Nexo co-founder Antoni Trenchev said in a statement that the company doesn’t offer its lending or exchange products in New York “so it makes little sense to be receiving a C&D for something we are not offering in NY anyway.” He said the company would respond to the attorney general and described the issue as a “clear case of mixing up the recipients of the letter.”