MyConstant allegedly violated California Consumer Financial Protection Law and the California Securities Law.
The California Department of Financial Protection and Innovation (DFPI), an institution regulating a variety of financial services, businesses, products, and professionals in California, has instructed crypto lender MyConstant to stop providing some of its crypto-related services.
According to the press release shared on December 21st, California’s DFPI investigation revealed that MyConstant violated California Consumer Financial Protection Law and the California Securities Law.
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In particular, DFPI stated that MyConstant should “desist and refrain” from providing its “peer-to-peer lending service and interest-bearing accounts.”
In the order, DFPI claims that by offering and selling its peer-to-peer lending service dubbed “Loan Matching Service,” MyConstant violated California’s financial laws. On top of that, the regulator alleges that MyConstant doesn’t have a license to provide lending services and, therefore, was involved in “unlicensed loan brokering.”
Nevertheless, the authorities claimed that MyConstant’s fixed interest-bearing crypto asset products were problematic. For interest-bearing crypto asset accounts, MyConstant reportedly offered “a fixed annual percentage interest rate yield.” On the other hand, the fiat interest-bearing accounts provided “a fixed annual percentage interest rate return.”
DFPI highlighted that the institution identified only a few matters when MyConstant sold or offered non-exempt or unqualified securities.
On December 5th, the California DFPI shared a press release revealing that it has launched an investigation into MyConstant. At that time, the regulator stated that it was looking into crypto lender because it is not licensed to operate in California.
Moreover, DFPI announced that it is collecting information from the investors in any way affected by MyConstant.
In September, California was on the verge of passing a crypto regulation bill. However, the bill was vetoed by California’s Governor Gavin Newsom, who stated that “a more flexible approach is needed” to release a law that would evolve at the same speed as the technology and protect consumers.
