The DFPI announced in a press release dated Dec. 21 that MyConstant violates the California Securities Law and California Consumer Financial Protection Law due to its peer-to-peer loan brokering service and interest-bearing crypto asset accounts.
MyConstant Alleged to Have Engaged in Unlicensed Loan Brokering
The DPFI alleged that MyConstant's offering and selling of its peer-to-peer lending service called; Loan Matching Service violates one of the state financial codes. It also alleged that MyConstant engaged in unlicensed loan brokering as the platform induced lenders to lend without proper licenses.
DPFI Also Investigated MyConstant's Fixed Interest-Beating Crypto Asset Products
The regulators also had a problem with the crypto lender's fixed interest-beating crypto asset products, whereby a customer deposits crypto assets (such as stablecoins and fiat) and is promised a fixed annual percentage interest return. They said are were examples where MyConstant offered and sold unqualified, non-exempt securities.
MyConstant Announces Financial Overview, Liquidation Schedule, and Estimated Recovery
The recent action comes only a month after the California-based company appeared to have fallen into hard times, announcing in November. In 2017, the rapidly deteriorating conditions led to heavy exits we were unable to continue operating as usual. The platform at the time added that it had limited its business activity, including pausing withdrawals, and that: No deposit or investment request would be processed at this time. The platform has been providing users with updates on its website since then, including an updated plan sent to users in December. 2015 which includes a financial overview, liquidation schedule, estimated recovery, and next steps. At the time, the platform said it would continue to administer its crypto-backed loans, including ensuring borrower compliance, processing loan repayments, returning borrowers' collateral (when their loans are paid in full), and liquidating borrowers' collateral in the event of default.
California Department of Financial Protection and Innovation Orders Crypto Lending Platform MyConstant to Desist and Refrain
The California Department of Financial Protection and Innovation (DFPI) has ordered crypto lending platform MyConstant to cease offering a number of its crypto-related products due to alleged state securities law violations. According to the DFPI's press release on Dec. 21, the platform has been ordered to (desist and refrain) from offering its peer-to-peer loan brokering service and interest-bearing crypto asset accounts. Allegations of Unlicensed Loan Brokering and Offering Unqualified, Non-Exempt SecuritiesThe DPFI alleged that MyConstant's offering and selling of its peer-to-peer lending service called (Loan Matching Service) violates one of the state's financial codes. It also alleged that MyConstant engaged in (unlicensed loan brokering) as the platform induced lenders to lend without proper licenses. The regulators had a problem with the crypto lender's fixed interest-beating crypto asset products, whereby a customer deposits crypto assets (such as stablecoins and fiat) and is promised a fixed annual percentage interest return. The DPFI claimed that these were examples where MyConstant offered and sold unqualified, non-exempt securities.
MyConstant Entering Hard Times, Providing Users Financial Overview and Liquidation Schedule
The recent action comes only a month after the California-based company appeared to have fallen into hard times, announcing on Nov. 17 that (rapidly deteriorating market conditions) prompted heavy withdrawals and that it was unable to continue to operate our business as usual. The platform at the time added that it had limited its business activity, including pausing withdrawals, and that: "No deposit or investment request will be processed at this time." Since then, the platform has been providing users with updates on its website, including an updated plan sent to users on Dec. 2015, which includes a financial overview, liquidation schedule, estimated recovery, and next steps. MyConstant confirmed that it would continue to administer its crypto-backed loans, including ensuring borrower compliance, processing loan repayments, returning borrowers' collateral (when their loans are paid in full), and liquidating borrowers' collateral in the event of default.
