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On December 23, 2024, The California Department of Financial Protection and Innovation (DFPI) announced a consent order with a crypto lending platform (the Company) that provides financial services to retail and institutional customers to resolve the Department’s investigation into the Company’s lending program. The DFPI alleged that the Company breached the California Financing Law by neglecting to properly assess borrowers’ ability to repay their loans, understating annual percentage rates on consumer loans while making false and misleading claims about those rates, imposing undisclosed administrative fees on borrowers, and engaging in unsafe and harmful business practices. The Department further alleged that the Company did not maintain the required $25,000 minimum net worth. Under the negotiated resolution, the Company will pay $162,800 in borrower refunds and $127,500 in penalties. The Company will also be subject to strict underwriting standards, risk disclosures, and other consumer safeguards, including providing information on how consumers can obtain refunds and close their loans. |
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