MyConstant Banned from Offering Crypto-Related Products for Violating California Laws
The announcement by the Department of Financial Protection and Innovation (DFPI), dated December 21, 2022, ordered MyConstant to refrain from offering loan matching services and interest-bearing crypto products in California.
The decision by DFPI revealed that the online platform -MyConstant was offering crypto-related products and services that violated California securities and consumer financial protection laws.
The California-based company offers various crypto-related services and products to improve user experience in the crypto ecosystem.
The services involved peer-to-peer loan brokerage services, crypto-bearing assets, and interest-bearing fiat accounts. Undeniably, investigations conducted by DFPI confirmed that the services offered by MyConstant contravened California financial codes and securities laws.
MyConstant Violation of Law
The peer-to-peer loan services violated the Consumer Financial Code section 22100 by advancing unlicensed consumer loans and services. Beyond unlicensed loans, DFPI made it public that interest-bearing crypto asset accounts provided by MyConstant fail to meet all the requirements stipulated under Corporations Code sections 25019 and 25110.
DFPI investigations confirmed it was considered unqualified and non-exempted.
Surprisingly, the crypto firm ignored a directive issued by the Commissioner of Financial Protection and Innovation limiting several MyConstant operations. DFPI confessed through a December 5 that it initiated surveillance in July targeting multiple online platforms offering crypto loans and interest services that contravened California regulations.
MyConstant Faces Challenging Times
California’s ban comes shortly after MyConstant notified customers of the intention to suspend operations, citing disrupted service delivery caused by the turbulent crypto market. The November 17 notification prompted huge withdrawals that affected MyConstant ability to sustain its operations.
Notably, the platform minimized its presence by halting customer withdrawals, purchase requests, and deposits to be administered on the forum.
Despite the market spillover, MyConstant was optimistic that business would return to normal. Later, the company emailed the customers on December 15, conveying its plans for the future. Such plans comprised the company financial overview, estimated recovery, liquidity plan, and other essential steps.
In the meantime, MyConstant restated continued operations in offering crypto-backed loans, administer loan repayment and liquidate collateral attached to defaulted loans. The company indicated that it would sustain the delivery of such services by ensuring borrower compliance.
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