There are many reasons to be cautious with the operation of some crypto-related services and firms. Some of these companies have raised the attention of many regulatory agencies in different countries through their service. In addition, many jurisdiction laws now have strict regulatory stances for firms providing unregistered securities.
Many countries have listed regulations and classifications to better govern crypto services and assets. Such rules are meant to serve as guides for the operations of crypto service providers. However, in some cases, if any firm breaches the law and create lapses, leading to loss of funds for customers, regulatory bodies consider the accountable and there are certain consequences.
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In a recent report, the Department of Financial Protection and Innovation (DFPI) California scrutinizes activities in crypto interest accounts.
The Department has commenced investigations on some providers of crypto interest accounts. The aim is to ascertain if the providers are against the laws within the Department’s authority. The agency released a notification on Tuesday stating providers of crypto interest account operates utterly different from those of banks and credit unions.
The Department also disclosed that such platforms restrict users from accessing their funds for withdrawal and transfers to other accounts. The Department mentioned that such platforms’ operators hide some information from their users. They fail to inform them of potential risks with depositing funds on the platforms.
Crypto Interest Accounts Providers Accused Of Offering Unregistered Securities
Additionally, the Department disclosed that some providers of crypto interest accounts are offering unregistered securities in their services. It mentioned that it has already issued two cease-and-desist orders to Voyager and BlockFi. Banning them from operating in California.
The DFPI had warned residents to be cautious while engaging in any financial service or investment offering. The Department came up with the warning after the saga from some interest account providers like Voyager Digital and Celsius Network.
The providers had locked users’ funds due to problems of insolvency emanating from the prevailing crypto bear market. Therefore, the locked-up assets have taken place without certainty on the release.
One of the affected platforms, Voyager, is processing a recovery plan for its users’ funds through its post-bankruptcy restructure. As such, depositors on the platform would get Voyager shares of the newly reorganized firm. Also, users would be entitled to fund from Three Arrows Capital (3AC).
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