DeFi Platforms Targeted by New York Attorney General

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  • New York Attorney General Laetitia Adams has begun targeting the DeFi sector
  • Adams has taken steps to stop five DeFi lending platforms from operating in the New York area
  • Such action will only increase a move towards DAO-based systems

New York Attorney General Laetitia Adams has targeted DeFi lending platforms in an effort to “protect New York investors…from exploitation by high-risk virtual currency schemes”. Adams sent cease and desist letters to two unnamed DeFi lending platforms and demanded three others provide information on their services in a sign that the state is taking strong steps to eradicate unregulated crypto platforms, although how successful this will ultimately be is up for debate.

Adams Takes on Lending Platforms

New York has long been one of the more dangerous places for cryptocurrency enterprises to operate, ever since the onerous New York BitLicense came into being in 2015. Ever since then the state, and more specifically the city, has been doing all it can to clamp down on cryptocurrency activity, which has resulted in many crypto operations and services not being available to New York residents.

Adams famously took on iFinex and Tether in 2019, a case that was only resolved with a settlement earlier this year, and it seems this action only gave her office a taste for tackling crypto entities. The Attorney General’s office published a press release yesterday that stated how they were going after DeFi lending platforms that services New York citizens, citing the Martin Act as the rationale behind the move. This is the same act that Adams’ office accused Tether of violating.

DeFi Platform Accused of Violating Martin Act

The press release claimed that the five unnamed companies may have “engaged in fraud or…illegally operated in New York” and stated that the action “send(s) a message that we will not hesitate to take whatever actions are necessary against any company that thinks they are above the law.”

Such actions are possible to take against entities with centralized offices, but the rise of DAOs means that such actions will become increasingly difficult over time. The five targeted DeFi platforms were redacted in the notice accompanying the press release, but it is unlikely that they will stay unknown for long.