**Update** MyConstant decided to respond to this review in the comments. It is worth noting that recent SEC guidance explains how adding crypto to an investment opportunity does not bar it from being subject to regulation based on the underlying transaction, Spotlight on Initial Coin Offerings (ICOs). For an example look at ICOBox, but a broker of loan notes instead of shares.
The website myconstant.com, run by CONST LLC (a Delaware corporation), appears to be offering unregistered securities. Constant advertises investments in peer to peer loans that return up to 10% interest. These loans are “(f)ully secured, fully backed. All loans and investments are protected by a combination of FDIC insurance, Ethereum smart contracts, and crypto collateral.” Whatever that means.
The website myconstant.com, run by CONST LLC (a Delaware corporation), appears to be offering unregistered securities. Constant advertises investments in peer to peer loans that return up to 10% interest. These loans are “(f)ully secured, fully backed. All loans and investments are protected by a combination of FDIC insurance, Ethereum smart contracts, and crypto collateral.” Whatever that means.
Constant
does not have any links to Securities and Exchange Commission (SEC) securities
filing on its website, but does have an address in Redlands, CA. It also reassuringly
has phone numbers in four countries, the United States, Hong Kong, Vietnam, and
Malta.
Constant
has run some deceptive advertisements on Facebook that seem to imply it is also
a bank that takes “fixed deposits.” There is a legitimate way to offer
investments in peer to peer loans, and it seems to involve registering with the SEC and
filing prospectuses. Examples include Prosper and Lending Club. Constant has
not done that. Unless you want to send your money out of the country on what
may be a one way trip, stay away.
Unsafe Investment
|
Very Risky Investment
|
Reasonable Investment
|
A customer forwarded your "scam alert" to us so I thought I'd set the record straight.
ReplyDeleteAlthough your intentions seem good, your conclusions are just plain wrong. You'll have realized this had you done a little research, or by reaching out to us directly.
I'll explain it all for you now.
CONST LLC (hereafter I'll refer to as Constant) does not fall under SEC regulations. We do not sell securities. We are NOT the same as Prosper or Lending Club. All business on our platform takes place using a USD-backed stablecoin. Since stablecoins are not currently regulated by the SEC, we're exempt from SEC rules.
So, if you lend through our platform, you're exchanging your fiat investment for a USD-backed stablecoin, which is then lent to a borrower. The borrower can then withdraw the stablecoin to their digital asset wallet, or convert it to USD and withdraw it to a bank account (subject to KYC approval).
Similarly, at the end of a loan term, the investor's principal and earned interest are returned in the stablecoin. The investor has the choice to withdraw that stablecoin in USD (subject to KYC approval) or as a stablecoin to a wallet address.
Our advertisements are written plainly, using words that match the action. Our investors do "deposit" USD (in return for the stablecoin) and our borrowers do "deposit" collateral. The word "fixed" refers to the fact all investments and loans are for a fixed term.
Under no circumstances would we want to be considered a bank. In fact, we state clearly on our website that we are not a bank. Here's the section, copied verbatim:
"Is CONST LLC a bank?
Please note that CONST LLC (hereafter referred to as “we”, “us”, or “Company”) is not a bank or deposit account, nor is it a regulated financial institution. Constant tokens are not financial instruments. No interest will be paid on any funds or other assets held in your Constant account and all assets directly held by us are not insured by us or, except as set forth below, any third party or any government agency.
We work with independent third-party financial institutions to provide cash management for the fiat deposits backing Constant tokens, ensuring that all Constant tokens in circulation are matched by an equal amount of fiat deposits. To achieve this, the fiat deposits backing Constant are held in one or more depository accounts at US banks or trust companies whose deposits may be insured by the Federal Deposit Insurance Corporation (“FDIC”).
US Dollar depository accounts are generally protected by FDIC insurance up to $250,000 in each insured bank for each account ownership category. However, since depository accounts may involve large balances exceeding this deposit insurance limit, we have taken additional steps to provide protection for the funds.
Additional protection on deposits
To provide additional protection, the independent third-party financial institution bank or trust company may either: (1) deposit US Dollar funds in multiple FDIC-insured US banks to provide full insurance coverage or (2) use sweep accounts that can protect the deposits through overnight investments in US Government Treasuries. FDIC insurance is not applicable to the collateral deposited to secure loans through the Constant platform."
As I said, your intentions appear good, but unless you do your research before drawing conclusions, you might end up damaging the reputation of a business that did nothing to deserve it.
I'm always open to a chat, as are my colleagues, and you can even reach out to our customers on Telegram. I wanted to email you as well as responding to this blog but unfortunately can't find any contact information on your website. Perhaps you want to remain anonymous?
Anyway, if you've got any further comments or questions, drop me a line. My email is chris@myconstant.com. You also have those phone numbers you mentioned above. We'd also really appreciate it if you could correct the mistakes you've made in your post.
I think the SEC thinks about ICOs differently: "SEC Charges ICO Incubator and Founder for Unregistered Offering and Unregistered Broker Activity", https://www.sec.gov/news/press-release/2019-181. See also https://www.sec.gov/ICO.
ReplyDeleteThese loans are “(f)ully secured, fully backed. All loans and investments are protected by a combination of FDIC insurance, Ethereum smart contracts, and crypto collateral.” Whatever that means.
ReplyDeleteLOL, if you don't know what that means should you be really writing reviews? Also Constant isn't facilitating ICOs. I'm currently in the process of vetting them myself so I was looking for somebody who wrote a good review on it but this is an utter waste of time.
It's not that MyConstant doesn't use each, it that doing so does not provide the protection they advertise. The fact money is FDIC insured when in MyConstant's bank accounts before moving to loans doesn't protect investors: if the loan isn't paid due to a bug in the smart contract, money is not actually being invested as they say, or they go out of business and keep the money. Because it is not a regulated investment platform, the only basis for trust are the words on a website.
ReplyDeleteMy take and conclusions on MyConstant:
ReplyDeletehttps://p2pinvesting101.blogspot.com/
Damn, you tell him Chris! Nice rebuttle =) I've just starting using your platform recently and really like it. Looking forward to having an app at some point, but for now the website works well and I really like that you offer 4% for the money to literally just sit there. I dont know why people are screaming from the hills and popping out of every dark alley roaring about how incredible an interest rate that is compared to most savings accounts. Its absurd. (Absurdly good.) I'm really hoping this loan I just got approved works out well at 8% interest. If I find that there is really enough certainty and low risk in these loans, I will end up investing thousands of more dollars.
ReplyDeleteIs this investment guaranteed or your money back?
ReplyDeleteWants the writer to "correct" their post about the company being a possible scam and yet the response is rather unprofessional and even aggressive on some parts which are trademarks of when something turns out to be a scam, they end up making it look like they are taking it as a personal attack and making it look worse. Also since you claim that none of your advertisements are misleading I can say for a fact that isn't true as when I tried it out I came in with the promise of having 3k in my account to gather interest on and that I could use that to also invest on the platform, Not true, the interest was mine to keep but turns out that isn't true I only got 2k and for the so called interest it was nowhere near 4% plus the ad stated that was daily, in truth that's monthly but after 3 months I only earned $6 that is NOT 4% even if it was monthly. So maybe you should do some research on your own company before trying to be passive aggressive about a blog post lol. So yea your ads are all over the place but you guys dont even follow that
ReplyDeleteHi all,
ReplyDeleteThanks for the comments – didn't expect to see so many!
Apologies if my tone was a little off. Perhaps I was a little raw after reading this blog post. Sorry about that!
Anyway, let me start by clearing up a few things:
1. SEC appears to have changed its stance on stablecoins, though the rules are far from definitive. Everything is handled by our digital asset custodian, Prime Trust.
2. Website wording has undergone a few changes. While all lending is backed by crypto, it's not "secured" in any legal sense (you rely on us to sell the collateral and repay you) and the use of that particular word might've been misleading. Apologies.
3. No smart contracts anymore. Given the scalability issues of most blockchains, running autonomous smart contracts exposes us to congested networks, which might limit our capacity to sell crypto and return investor money if the borrower defaults.
4. Your investments are at risk on MyConstant. Even with collateral backing every loan, we can't guarantee your principal and profit. That said, our business model has survived several market crashes and defaults and has ALWAYS returned investors principal and earned profit.
5. Our advertising is accurate. The $3K trial was a temporary Christmas promotion. It effectively means we put up the cash for your first investment. It's not a cash giveaway, but a chance to watch your money grow in real-time while you learn how to use the platform.
A condition of the $3K trial is that you pass KYC within the promotions period. It's possible "Vicious" didn't pass KYC in time to receive the $3K and instead got our standard $2K promotion.
The trial is for Flex, our instant access investment account that pays 4% APY, compounded and paid every second. That works out to be around $6.67 for the 30-day trial period, which is 4% of $2,000 divided by 12. "Vicious" got the right amount.
Of course, you can't withdraw the trial bonus of $2K or reinvest it in a fixed-term loan. We simply front the money for a 30-day investment in Flex, after which, we take back the money but you keep the interest.
6. It's hard to predict what might happen if we went bust, but we wrote a blog about it here: https://blog.myconstant.com/in-the-unlikely-event-myconstant-ceased-trading-what-would-happen-to-your-assets/.
Hope these points help to clarify a bit about us and what we do. Like all investments, you funds are at risk so you should always use caution and diversify. We do our best to make these risks known and you'll find 100s of hours of helpful blog, video, and audio content on our site.
We always have room for improvement in how we communicate and I appreciate all of your feedback.
As always, you can reach out to me at chris@myconstant.com.
All the best
I absolutely Love My Constant! August will be a year for me and I have never had an issue with USD or crypto deposits or withdrawals. I know this was about an ill prepared attack on MC and subsequent dismantling of said attack but I just wanted to say how awesome this company is!
ReplyDeleteMy Name is Jonathon Swiney and I own the above post
Delete"SACRAMENTO – The Department of Financial Protection and Innovation today announced that it has ordered CONST LLC (doing business as “MyConstant”) to desist and refrain from violating the California Securities Law and California Consumer Financial Protection Law."
DeleteDec 21, 2022
https://dfpi.ca.gov/2022/12/21/dfpi-orders-myconstant-to-cease-offering-crypto-related-products/