California authorities demand to stop “MyConstant” Company

Due to potential violations of state securities law, the California Department of Financial Protection and Innovation (DFPI) has ordered cryptocurrency lending platform MyConstant to stop selling a number of its cryptocurrency-related products.

In a December 21 press release, DFPI stated that it had ordered MyConstant to cease and desist from brokering peer-to-peer loans and interest-bearing crypto-asset accounts.

According to the DFPI, the company is in violation of the California Securities Act and the California Consumer Financial Protection Act.

DFPI stated that it issued the order.

The Department of Consumer and Financial Institutions (DPFI) charged that “MyConstant” violated a state financial rule when it offered and sold a peer-to-peer lending business known as a loan matching service.

It was also reported that MyConstant engaged in unauthorized loan brokerage, due to the fact that the platform incentivized lenders to lend without proper authorizations.

The authorities have also had trouble with the cryptocurrency lender's fixed-interest cryptocurrency products.

These are products where the consumer deposits crypto assets (such as stablecoins and fiat currencies) and is guaranteed a fixed annual interest return on their investment.

These cases were said to be examples of MyConstant offering and selling securities that did not qualify for an exemption.

DFPI issued a press release on December 5 indicating that “MyConstant” does not have a license from DFPI to operate in California.

This was the first announcement that DFPI had conducted an investigation into MyConstant.

The latest action comes less than a month after the California-based company fell on hard times, announcing on November 17 that rapidly deteriorating market conditions had led to heavy withdrawals and that it was not able to continue to conduct business as usual.

At the time, the platform also said it had reduced the amount of trading activity it was doing, including suspending withdrawals, and that no deposit or investment requests would be processed at this time.

When asked at the time, the platform stated that it would continue to manage its cryptocurrency-backed loans.

This will include ensuring compliance towards borrowers, processing loan repayments, returning borrowers' collateral (when their loans are paid in full), and liquidating borrowers' collateral in the event that borrowers default on their loans.

Posted using Proof of Brain