STATE OF VERMONT
DEPARTMENT OF FINANCIAL REGULATION
IN RE: )
UPHOLD HQ INC. ) DOCKET NO. 19-070-B
NMLS # 1269875 )
STIPULATION AND CONSENT ORDER
The Vermont Department of Financial Regulation (the “Department”) and Uphold HQ Inc. (“Respondent”) hereby stipulate and agree as follows:
Pursuant to 8 V.S.A. Chapters 1, 72, and 79, the Commissioner of the Vermont Department of Financial Regulation is charged with administering and enforcing Vermont law as it pertains to money transmitters in the State of Vermont.
Respondent is a South Carolina corporation with a principal place of business at 900 Larkspur Landing Circle, Suite 209, Larkspur, CA.
Respondent is not currently, nor has it ever been, licensed to engage in the business of money transmission in Vermont.
Respondent acknowledges and admits the jurisdiction of the Commissioner over the subject matter of this Stipulation and Consent Order set forth herein.
Respondent operates a virtual currency exchange which serves as an online trading and settlement platform for virtual currency transactions.Respondent offers members the ability to store, move or exchange a variety of virtual currencies.
Respondent has operated the online platform in Vermont since 2014.
On February 8, 2019, Respondent submitted an application through the Nationwide Multistate Licensing System (“NMLS”) to obtain a Vermont money transmitter license.
Vermont’s Money Services Act, 8 V.S.A. Chapter 79 defines “money transmission” to include “selling or issuing prepaid access” and “receiving money or monetary value for transmission to a location within or outside the United States.” 8 V.S.A. § 2500(11). “Prepaid access,” by definition, includes virtual currency. 8 V.S.A. § 2500(12).
While Vermont has always taken the position that virtual currency is a form of monetary value subject to the requirements of the Vermont Money Services Act, on May 4, 2017, Vermont amended its money transmission statute to add a definition of “virtual currency” (the “Virtual Currency Amendment”) thereby putting virtual currency exchange operators on notice that storing or transmitting virtual currencies on behalf of customers in Vermont would require licensure as a money transmitter under 8 V.S.A. Chapter 79.
The Department asserts that prior to obtaining a Vermont money transmitter license, Respondent engaged in the business of money transmission in Vermont without the license or the authorization required by 8 V.S.A. Chapter 79 by storing money or monetary value in Uphold accounts.
The Department asserts that prior to obtaining a Vermont money transmitter license, Respondent engaged in the business of money transmission in Vermont without the license or the authorization required by 8 V.S.A. Chapter 79 by accepting virtual currency, a form of monetary value, and transmitting the virtual currency to another location or person.
Respondent certifies that prior to obtaining a license in Vermont, it operated since August 27, 2014 and that as of October 31, 2019, in aggregate, effected 1001 transactions, and received $3,245 in fees.
Respondent acknowledges that the Department is relying upon its representations and warranties in making its determinations in this matter.
At all times, Respondent has cooperated with the Department.
The Department has not received any complaints stemming from Respondent’s Vermont activity.
The parties wish to resolve this matter without administrative or judicial proceedings.
Respondent and the Department expressly agree to enter into this Stipulation and Consent Order in full and complete resolution of the alleged violations described herein.
Respondent agrees to pay an administrative penalty of $6,500 to the Department of Financial Regulation.The penalty was calculated based on licensing fees and assessments Respondent would have paid if properly licensed during the period of time Respondent conducted business in Vermont and the partial disgorgement of fees earned during the period of unlicensed activity.This shall be paid within ten (10) days of the execution of this Stipulation and Consent Order.
Respondent shall not, either directly or through its affiliates, engage in the business of money transmission in Vermont without a Vermont money transmitter license.
This Stipulation and Consent Order shall not prevent any person from pursuing any claim he or she may have against Respondent, nor shall it be understood as determining whether any such claim may or may not exist in law or equity. Nothing contained herein shall be deemed an admission by Respondent, except as set forth in paragraph 4 above.
Nothing contained in this Stipulation and Consent Order shall restrain or limit the Department in responding to and addressing any complaint filed with the Department involving Respondent and the Department reserves the right to pursue restitution in connection with any complaint filed with the Department.
The Department and Respondent are entering into this Stipulation and Consent Order to settle a dispute between them and all agree that this Stipulation and Consent Order does not constitute an adjudication of a violation of statute or regulation, and Respondent neither admits nor denies the Department’s allegation that it violated Vermont’s money transmitter laws by engaging in money transmission without a license or authorization under Title 8, Chapter 79.
Respondent hereby waives its statutory right to notice and a hearing before the Commissioner of the Department, or his designated appointee.
Respondent acknowledges and agrees that this stipulation is entered into freely and voluntarily and that except as set forth herein, no promise was made to induce the Respondent to enter into it. Respondent acknowledges its understanding of and agrees to all terms, conditions, and obligations contained in this Stipulation and Consent Order.
The terms set forth in this Stipulation and Consent Order represent the complete agreement between the parties as to its subject matter.
The undersigned representative of Respondent affirms that he or she has taken all necessary steps to obtain the authority to bind Respondent to the obligations stated herein and has the authority to bind Respondent to the obligations stated herein.
Uphold HQ Inc.
By: ____________________________________________ Date: __________________
Print name & title:
Molly Dillon, Deputy Commissioner Date
Banking Division, Vermont Department of Financial Regulation
1. The stipulated facts, terms, and provisions of the Stipulation are incorporated by reference herein.
2. Jurisdiction in this matter is established pursuant to Chapters 1, 72, and 79 of Title 8.
3. Pursuant to the Stipulation, Uphold HQ Inc. consents to the entry of this Consent Order.
4. Uphold HQ Inc. shall comply with all agreements, stipulations, and undertakings as recited above.
Dated at Montpelier, Vermont this ____ day of January 2019.
Michael S. Pieciak, Commissioner
Vermont Department of Financial Regulation