On January 14, the California DFPI announced a consent order against a Cayman Islands-based company, which offers crypto-backed loans and services, and ordered it to pay a $500,000 penalty. The DFPI’s investigation revealed that, from July 26, 2018, through November 22, 2022, the company contracted for loans with 5,456 California residents without obtaining a California Financing Law (CFL) license, in violation of state law. Specifically, the agency found that the company was providing consumer and commercial loans to California residents through a crypto-backed lending program, which included both crypto and fiat money loans secured by crypto collateral.
During the same period, the company failed to consider borrowers’ ability to repay these loans, also in violation of state law. As a result, the DFPI ordered the company to desist and refrain from violating the CFL and the California Consumer Financial Protection Law and their related regulations. The company must also notify all affected consumers that their funds will be transferred to a properly licensed entity.
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