Cal. FIN § 3403 — California Code / Code fin / Division 1.25 / Chapter 4 / Section 3403
Section 3403
Status: in_force

(a) The department may take an enforcement measure against a licensee or person that is not a licensee but has engaged, is engaging, or is about to engage in digital financial asset business activity with, or on behalf of, a resident in any of the following instances:

(1) The licensee or person materially violates this division, a rule adopted or order issued under this division, or a law of this state other than this division that applies to digital financial asset business activity of the violator with, or on behalf of, a resident.

(2) The licensee or person does not cooperate substantially with an examination or investigation by the department, fails to pay a fee, or fails to submit a report or documentation.

(3) The licensee or person, in the conduct of its digital financial asset business activity with, or on behalf of, a resident, has engaged, is engaging, or is about to engage in any of the following:

(A) An unsafe or unsound act or practice.

(B) An unfair or deceptive act or practice.

(C) Fraud or intentional misrepresentation.

(D) Misappropriation of legal tender, a digital financial asset, or other value held by a fiduciary.

(4) An agency of the United States or another state takes an action against the licensee or person, which would constitute an enforcement measure if the department had taken the action.

(5) The licensee or person is convicted of a crime related to its digital financial asset business activity with, or on behalf of, a resident or involving fraud or felonious activity that, as determined by the department, makes the licensee or person unsuitable to engage in digital financial asset business activity.

(6) Any of the following occurs:

(A) The licensee or person becomes insolvent.

(B) The licensee or person makes a general assignment for the benefit of its creditors.

(C) The licensee or person becomes the debtor, alleged debtor, respondent, or person in a similar capacity in a case or other proceeding under any bankruptcy, reorganization, arrangement, readjustment, insolvency, receivership, dissolution, liquidation, or similar law, and does not obtain from the court, within a reasonable time, confirmation of a plan or dismissal of the case or proceeding.

(D) The licensee or person applies for, or permits the appointment of, a receiver, trustee, or other agent of a court for itself or for a substantial part of its assets.

(7) The licensee or person makes a material misrepresentation to the department.

(b) On application and for good cause, the department may do either of the following:

(1) Extend the due date for filing a document or report under paragraph (2) of subdivision (a).

(2) Waive, to the extent warranted by circumstances, including a bona fide error notwithstanding reasonable procedures designed to prevent error, an enforcement measure issued for a violation described by paragraph (2) of subdivision (a) if the department determines that the waiver will not adversely affect the likelihood of compliance with this division.

(c) In an enforcement action related to operating without a license under this division, it is a defense to the action that the person has in effect a customer identification program reasonably designed to identify whether a customer is a resident that failed to identify the particular customer as a resident.

(d) A proceeding under this division is subject to the Administrative Procedure Act, as described in Section 11370 of the Government Code.