The California Department of Financial Protection and Innovation (DFPI) has warned consumers to “exercise extreme caution” when dealing with interest-bearing crypto-asset accounts.
The DFPI stated that it is investigating multiple crypto interest account providers to determine whether they are “violating laws under the Department’s jurisdiction.”
In a July 12 note, the DFPI emphasized that crypto-interest account providers “are not governed by the same rules and protections as banks and credit unions” and that some platforms 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.”
“Consumers are encouraged to exercise extreme caution before responding to any solicitation offering investment or financial services,” the DFPI added.
The DFPI also said that in its view certain crypto-interest account providers have been providing unregistered securities, pointing to two cease and desist orders it recently issued to BlockFi and Voyager to stop their offerings in California.
The warning comes in response to crypto interest account providers such as Celsius Network and Voyager Digital both locking up customer assets over severe liquidity issues amid a crypto bear market.
As it stands, customer funds of both platforms have been locked up for several weeks, with the fate of their depositors’ holdings is still…