DFPI is actively investigating multiple companies offering “crypto-interest accounts”
The California Department of Financial Protection and Innovation (DFPI) is investigating multiple companies nationwide that offer customers interest-bearing crypto asset accounts (commonly referred to as “crypto-interest accounts”). A crypto-interest account allows customers to lend crypto assets to the company and, in exchange, receive interest paid in crypto assets.
Due to market conditions, some of these companies are preventing customers from withdrawing from and transferring between their accounts.
The Department warns California consumers and investors that many crypto-interest account providers may not have adequately disclosed risks customers face when they deposit crypto assets onto these platforms. Crypto-interest account providers are not governed by the same rules and protections as banks and credit unions, which are required to have deposit insurance.
In recent actions against BlockFi and Voyager Digital, the Department found that certain crypto-interest accounts were unregistered securities. The purpose of securities registration, in part, is to ensure that investors receive all material information needed to evaluate whether to enter into these crypto-interest account arrangements, such as risks being taken with deposited funds.
The Department is investigating whether other crypto-interest account providers are violating laws under the Department’s jurisdiction.
Consumers are encouraged to exercise extreme caution before responding to any solicitation offering investment or financial services. California customers of crypto-interest account providers that have slowed or paused withdrawals or transfers of crypto assets should contact the Department for questions or inquiries at email@example.com or call toll-free at (866) 275-2677 and may file a formal complaint with the DFPI at https://dfpi.ca.gov/file-a-complaint/.
When submitting a complaint, customers should include the following attachments:
- Transaction history, which can usually be accessed through the crypto-interest account provider’s website or app;
- Correspondences with the provider; and
- Screenshots of all other records relating to their tokens and the relevant blockchains.
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