California Regulator Investigating Crypto Interest Account Providers

The California Department of Financial Protection and Innovation (DFPI) is another state regulator in the United States that initiated an investigation against crypto companies offering interest-bearing accounts.

“The Department is investigating whether other crypto-interest account providers are violating laws under the Department’s jurisdiction,” the regulator stated in an announcement on Tuesday.

However, the California regulator did not name any crypto lending Crypto Lending The process of lending cryptocurrency assets with an accrued interest rate and due date is known as crypto lending. The process of crypto lending often occurs through cryptocurrency exchanges or online lending platforms to connect borrowers to lenders. Lenders of crypto lending are comprised of institutional lenders, like hedge funds and asset managers, individual participants, or entities seeking to accrue interest. On the opposite end of the spectrum, borrowers of crypto lending include market The process of lending cryptocurrency assets with an accrued interest rate and due date is known as crypto lending. The process of crypto lending often occurs through cryptocurrency exchanges or online lending platforms to connect borrowers to lenders. Lenders of crypto lending are comprised of institutional lenders, like hedge funds and asset managers, individual participants, or entities seeking to accrue interest. On the opposite end of the spectrum, borrowers of crypto lending include market Read this Term companies under its scanner.

The necessity for the investigation was pushed after several crypto lending platforms suspended withdrawals amid the ongoing market turmoil, while a few even collapsed. The regulator even highlighted BlockFi and Voyager Digital and said that it found certain crypto interest accounts as unregistered securities.

“The Department warns California consumers and investors that many crypto-interest account providers may not have adequately disclosed risks customers face when they deposit crypto assets onto these platforms,” the regulator stated.

The Collapse of Crypto Lenders

The vulnerabilities of crypto lending platforms were surfaced in recent months. Celsius, the CEO of which was once willing to explain the crypto lending business model to US regulators, suspended all withdrawals between accounts on June 12 and hired restructuring experts. Now, the state regulator of Vermont has initiated an investigation against Celsius.

BlockFi, another crypto lending platform that settled with US regulators by paying $100 million, was bailed out by other industry giants. Singapore-based Vauld, suspended withdrawals and is considering restructuring, while Voyager has filed for bankruptcy Bankruptcy Bankruptcy or insolvency constitutes a legal term and refers to being unable to repay debts. A business and a person can declare bankruptcy. When a person or company claims bankruptcy, it is described as a voluntary bankruptcy, and when your debtors force you into bankruptcy, it is referred to as involuntary. A voluntary bankruptcy occurs when the debtor or borrower, the party that owes the money files with the courts. Involuntary bankruptcy happens when your credits file a petition with the co Bankruptcy or insolvency constitutes a legal term and refers to being unable to repay debts. A business and a person can declare bankruptcy. When a person or company claims bankruptcy, it is described as a voluntary bankruptcy, and when your debtors force you into bankruptcy, it is referred to as involuntary. A voluntary bankruptcy occurs when the debtor or borrower, the party that owes the money files with the courts. Involuntary bankruptcy happens when your credits file a petition with the co Read this Term.

“Consumers are encouraged to exercise extreme caution before responding to any solicitation offering investment or financial services. California customers of crypto-interest account providers that have slowed or paused withdrawals or transfers of crypto assets should contact the Department for questions,” the regulator added.