California Takes Action Against Interest-Bearing Crypto Accounts

There are several states in the United States that are working on developing crypto regulation, as the popularity of the space continues to grow and so do the risks. The Department of Financial Protection and Innovation (DFPI) in California issued a warning to people to be cautious before they decide to make investments in crypto accounts that generate interest.

Crypto interest accounts

The DFPI warned people crypto investors in California to refrain from investing in interest-bearing crypto accounts. According to the regulatory authority, it is investigating crypto accounts that offer different rates of interest to customers in order to determine if they are in violation of the laws of the authority in its jurisdiction.

On Tuesday, the DFPI asserted that platforms that were offering these interest-bearing crypto accounts were not complying with the same rules and regulations that are applicable to banks and other financial institutions, like credit unions. In addition, it asserted that some of these platforms had gone as far as restricting their clients from making withdrawals and even transferring their funds between different accounts.

The DFPI added in the warning that investors and consumers in California should stay vigilant because most of these account providers do not disclose the risks associated with these accounts when deposits are made. The regulatory authority also urged investors to be careful of any solicitations they may receive for investing in such platforms.

The authority said that people should assess the platforms first, along with their offerings because a number of platforms that provide interest-bearing crypto accounts are offering unregistered securities. In addition, the DFPI also issued a cease and desist order to BlockFi and Voyager Digital in order to halt their services in California.

Voyager files for bankruptcy

It is important to note that crypto lending platforms that usually offer these interest-bearing accounts are in trouble because of the tough market conditions. Both Voyager and BlockFi are included in this list and the problems are such that the former has had to file for bankruptcy.

It had all started with Celsius Network, which had first paused withdrawals and transfers between accounts, as mentioned by the DFPI.

Recovery plan

As far as Voyager Digital is concerned, it has come up with a recovery plan that will compensate customers through a combination of VGX tokens, cryptocurrencies, and shares of a company that has been recently established.

The users of the exchange will also receive the proceeds that Voyager Digital will get from its loan to Three Arrows Capital, the crypto hedge fund that has also filed for bankruptcy. The company said that the amount the customers will receive will depend on what Voyager gets from 3AC, but not all of the exchange’s depositors are happy with this move.

A Twitter user even referred to the warnings of the DFPI regarding the disclosure of risks by these crypto platforms. Users have complained that the exchange had not issued any warning about freezing their assets and had used them for raising their value.

Leave a Reply

Your email address will not be published.


Coins Capital Review, – Is Coins Capital Scam Or Legitimate?

Coins Capital Trading Platform Rating 4.3 Summary Read our Coins Capital review at FStar Capital Forex and Cryptocurrency Trading blog, find the answer to your question “is Coins Capital scam or legit” and much more! Coins Capital Review You have been thinking for a long time if trading is for you. You have finally […]

AI Center Indicts ChatGPT Developer of Trade Law Violations: Claims Bias & Deception

The organization alleges that the creator of ChatGPT has violated Section 5 of the Federal Trade Commission Act with the release of GPT-4. This section of the act prohibits any practices or acts considered deceptive or unfair and that affect commerce. CAIDP has complained to the US Federal Trade Commission, intending to prevent the distribution […]

Investors Excited As XRP Market Capitalization Hits $20 Billion

It’s been wide jubilation today after XRP investors heard the announcement that the market capitalization has surged to $20 billion. XRP: a cryptocurrency developed and managed by Ripple, a San Francisco, United States, distributed data company. It was gathered that the coin itself responded to this development through a climb in price – it was […]

GlobalTrades Review, – Is Global Trades Scam or a Good Broker?

GlobalTrades Trading Platform Rating 4.6 Summary Read our Global Trades review at FStar Capital Forex and Cryptocurrency Trading blog, find the answer to your question “is scam or legit” and much more! GlobalTrades Review As people look at cryptocurrencies and their immense success, they are eager to start their own trading businesses. While […]

Belgium Regulator Sets To Impose New Crypto Ads Rules

The Belgium government has mandated that every firm offering crypto advertisements should register with it before launching any campaign. Henceforth, any crypto advertisement without the government’s backing would be treated as an offense with heavy consequences. According to the report, the Financial Services and Markets Authority (FSMA) of Belgium recently announced that every potential crypto […]