Crypto lender Nexo has had problems with state authorities in California, New York, Washington, Kentucky, Vermont, South Carolina and Maryland. Enforcement actions from securities regulators in several states have detailed that Nexo’s Earn Interest Product (EIP) may be in violation of securities laws.
Nexo has been targeted by several securities regulators over Crypto Lender’s Earn Interest Product
Following the problems that took place last year against Celsius and Blockfi interest bearing accounts, Crypto Lenderhas been targeted by several securities regulators.Nexohas been targeted by several Nexohas been targeted by state securities regulators regarding its Earn Interest Product (EIP). The State of Californiaalleges that since June 2020, Nexo has “offered and sold ineligible securities to the U.S. public at large and to California residents in the form of Earn Interest Product accounts.”
The State of New York and Attorney General Letitia James have filed alawsuitagainst Nexo. Similarly, New York State and James state that Nexo began providing EIPs from approximately June 2020 to the present. James alleges that Nexo acted as an “unregistered securities broker or dealer” in violation of New York’s Martin Act. Washingtonsaid the same thingand noted that Washington’s securities division has joined several states in law enforcement actions together.
Kentucky , Vermont, South CarolinaandMarylandhave all filed similar lawsuits against Nexo, with many of the lawsuits ordering Nexo to cease its current operations related to its interest-bearing accounts. Similar law enforcement actions were brought against Celsius in 2021 before the company went bankrupt. Blockfi was also targeted by securities regulators in several states in 2021, and in February 2022, Blockfi was charged by the U.S. Securities and Exchange Commission (SEC).
Blockfi decided to settle with the SEC and paid a $100 million fine. Crypto lenders have been in big trouble this year, and when rumors circulated that Celsius was insolvent, Nexo offered to buy its assets; Blockfi had zero exposure to Celsius, but when Celsius suspended withdrawals, the The company explained that the move caused a “significant increase in customer withdrawals” on the Blockfi platform.
Blockfi, however, has exposure to now-defunct crypto hedge fund Three Arrows Capital (3AC), and Blockfi’s CEO said the company lost $80 million from the bankrupt firm Nexo tweeted on September 26 that crypto lenders have not issued a statement regarding the securities regulator’s cease-and-desist order.Three days ago, the NFT Lending Desk featured Nexo’s co-founder and the company’s managing partnerAsk Me Anising (AMA)session, which featured the co-founder of Nexo and the company’s managing partner.
Image credit: Shutterstock, Pixabay, Wiki Commons, Editorial photo credit: T. Schneider / Shutterstock.comEditorial photo credit