California regulator investigates 'multiple' crypto lenders for insufficient disclosure
Categories: Crypto News US
Californiaregulator investigates 'multiple' crypto lenders for insufficient disclosure
TheCalifornia Department of Financial Protection and Innovation (DFPI) hasannounced that it is "actively investigating" cryptolenders that offer crypto interest accounts. Several US-based lenders facescrutiny after indefinitely halting transfers and withdrawals between useraccounts.
CryptoDen invitestargeted companies for failing to disclose deposit-related risks, although noneof these lending companies have been named, with the regulator indicating that interest-bearingcrypto -Asset accounts offering, and service providers who havefailed to adequately disclose deposit-related. Risk will be a focus.
In the months leading up to the regulatory decision, severalmajor crypto lenders – especially Celsius – have halted withdrawals andtransfers. Behind these freezes is the liquidity crisis triggered by the recentand sharp market downturn, in which bitcoin fell below $20,000 several times inJune alone.
The California regulator's decision to increase itsinvestigation comes after public comments from politicians and other regulatorsthat cautioned consumers about the risks of lending crypto. Crypto Lenders AHot Topic Crypto lenders have been the talk of the town in recent times. Lastmonth, crypto services business Nexo sought to buy "qualified"assets from rival crypto lender Celsius.
This followed assumptions of Celsius' imminent bankruptcy asit halted user withdrawals and transfers on "extreme market conditions".Earlier this month, crypto lender BlockFi signed a contract with FTX US, a division of SamBankman-Fried's crypto exchange.
This partnership will allow FTX to enhance its creditfacility with BlockFi and provide FTX an opportunity to acquire the potentiallystruggling lender. BlockFi co-founder Zac Prince said the deal was valued at up toUS$680 million, with an additional US$400 million revolving credit facility.