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ARTICLE · 04 MARCH 2025

California DFPI Reaches Settlement With Lender Over Crypto-Backed Loans

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On December 23, 2024, the California Department of Financial Protection and Innovation (DFPI) announced a consent order with a lender to resolve its investigation into the company's crypto-backed lending program...

United StatesTechnology
A.J. Dhaliwal
A.J. Dhaliwal
Mehul Madia
Mehul Madia
Maxwell Earp-Thomas
Maxwell Earp-Thomas
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On December 23, 2024, the California Department of Financial Protection and Innovation (DFPI) announced a consent order with a lender to resolve its investigation into the company's crypto-backed lending program, which the DFPI alleged violated multiple provisions of the California Financing Law. As part of the settlement, the lender has agreed to issue $162,800 in borrower refunds and pay $137,500 in penalties, while also implementing stricter underwriting standards, enhanced risk disclosures, and additional consumer protections.

The lender provides financial services related to crypto assets, including offering loans backed by cryptocurrency collateral. Between November 2019 and November 2022, the company issued 342 loans to 151 California residents, allowing borrowers to pledge crypto assets in exchange for fiat or crypto loans.

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