Two cryptocurrency lending platforms halted from operating in New York by AG of NY

 The New York Attorney General Letitia James has ordered two cryptocurrency lending platforms to stop operating in the state and sent three other platforms letters with questions about their operations.

According to Bloomberg, Nexo Financial LLC in a statement confirmed it had received a cease-and-desist letter, and that a person familiar with the matter said Celsius Network LLC was among the firms that received a request for more information.

The AG said that virtual currency lending products “fall squarely within any of several categories of “security” under the Martin Act,” meaning they must be registered with the attorney general’s office.

Nexo co-founder Antoni Trenchev said in a statement that the company doesn’t offer its lending or exchange products in New York “so it makes little sense to be receiving a C&D for something we are not offering in NY anyway.” He said the company would respond to the attorney general and described the issue as a “clear case of mixing up the recipients of the letter.”

A Celsius spokeswoman didn’t respond to a request for comment.

Celsius last week said it had raised $400 million from growth equity firm WestCap Group and pension fund Caisse de dépôt et placement du Québec, in a deal that valued the firm at more than $3 billion.

Crypto lending firms offer customers accounts to deposit cryptocurrencies and in some cases earn double-digit interest. Unlike bank accounts, the crypto accounts aren’t federally insured, and some regulators have said the accounts should be registered securities with more disclosures of their risks.

New York jjoins Kentucky, Texas, Alabama, Vermont and New Jersey in taking actions against crypto lending firms. Companies targeted by those states have included BlockFi Inc. and Celsius.

JEFFREY A NEWMAN REPRESENTS WHISTLEBLOWERS INCLUDING THOSE WITH sec WHISTLEBLOWER CASES. HE CAN BE REACHED AT JNEWMAN@NEWMANSHAPIRO.COM 617-823-3217