New York on crypto: “Either play by the rules or we will shut you down”

Rick Steves

The alert to industry members serves as a reminder to brokers, dealers, salespersons, and investment advisors that the State of New York will not tolerate unregistered cryptocurrency operations.

new-york-city

New York Attorney General Letitia James has urged investors “extreme caution when investing in virtual currencies” and added, “we’re sending a clear message to the entire industry that you either play by the rules or we will shut you down.”

The alert to industry members serves as a reminder to brokers, dealers, salespersons, and investment advisors that the State of New York will not tolerate unregistered cryptocurrency operations. They could potentially face “both civil and criminal liability”.

Attorney General Letitia James said: “Too often, greedy industry players take unnecessary risks with investors’ money, but, today, we’re leveling the playing field and issuing alerts to both investors and industry members across the nation. All investors should proceed with extreme caution when investing in virtual currencies. Cryptocurrencies are high-risk, unstable investments that could result in devastating losses just as quickly as they can provide gains”.

“We will not hesitate to take action against anyone who violates the law. Two weeks ago, we filed a lawsuit to shut down Coinseed’s fraudulent operation. Last week, we ended both Bitfinex and Tether’s illegal activities in New York. And now, today, we’re sending a clear message to the entire industry that you either play by the rules or we will shut you down.”

The Attorney General Office has recently banned Bitfinex and Tether from operating in New York. The ruling followed a thorough investigation of 2.5 million documents that concluded that Tether falsely represented that each of its stablecoins were fully backed, one-to-one, by U.S. dollars in reserve at all times.

Bitfinex and Tether also made false statements about the movement of hundreds of millions of dollars between the two companies to cover up the truth about massive losses by Bitfinex.

The New York AG also banned crypto trading platform Coinseed from operating in the State after operating as unregistered broker-dealers for more than three years while collecting over $1 million in investors’ assets.

The statement from Attorney General James speaks volumes of what is driving the SEC to take down Coinseed, who failed to register as commodities broker-dealers through their trading app. “Millions around the country and the world today use cryptocurrencies as decentralized digital currencies — unlike real, regulated government currencies, including the U.S. dollar — to buy goods and services, oftentimes anonymously, through secure online transactions”, said Attorney General James.

“Those in the industry who have information regarding illegal or unethical behavior in trading of virtual currencies are encouraged to file an anonymous, secure, and confidential transmission (including any documents) through the OAG’s whistleblower portal”, the AG office stated.

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