The state is demanding that a West Coast-based ride-sharing app put the brakes on a launch in the city.
A cease and desist letter was sent to Lyft, which had announced plans to launch the service in Brooklyn and Queens on Friday.
But now the Department of Financial Services says Lyft is violating a host of state insurance laws, because it uses normal people and their cars to provide rides.
In a letter to the company, DFS said, "In addition to Lyft's flagrant non-compliance with New York's Insurance and Financial Services Laws, its operations expose New York drivers and the New York private passenger automobile insurance market to intolerable risk, cost and uncertainty."
In response, Lyft told NY1, "We're having productive conversations with the DFS and believe we can resolve every issue outlined in the letter."