New York Attorney General Letitia James has ordered two more cryptocurrency exchanges to immediately cease their operations in the state. In addition to closing these exchanges, James directed another three platforms to immediately provide information about their activities and products. “Cryptocurrency platforms must follow the law, just like everyone else, which is why we are now directing two crypto companies to shut down and forcing three more to answer questions immediately,” Attorney General said.
Crypto exchanges were found facilitating illegal trading in violation of the Martin Act.
James considers crypto exchanges that offer interest-bearing accounts with a rate of return on cryptocurrencies deposited in them to be lending platforms. Consequently, James asserted they must register with her office or are otherwise facilitating illegal trading in violation of the Martin Act. The Martin Act is reputedly one of the most severe ‘blue sky’ laws, state laws that protect investors by requiring registration of all securities offerings and sales. Bloomberg reported that Nexo Financial LLC received a cease-and-desist letter, and Celsius Network LLC received a request for more information.
New York’s Martin Act established a broad-ranging scope for investments to be considered as securities.
The act passed a century ago, New York’s Martin Act established a broad-ranging scope for investments to be considered as securities. According to the 1921 law, “any stocks, bonds, notes, evidence of interest or indebtedness or other securities…or negotiable documents of title, or foreign currency orders, calls or options therefore hereinafter called security or securities.” According to the NY Attorney General, these defined categories of instruments are not exhaustive, meaning they can continually be applied to new investments. These exchange closures are the latest crypto firms accosted by James, following her shuttering of exchange Coinseed over the summer.