US State Authorities Sue Crypto Lender Nexo: Details
- California’s Department of Financial Protection and Innovation stated that it will join seven state securities regulators to bring down Nexo and issued cease and desist orders.
- New York Attorney General Letitia James wants Nexo to pay restitution and disgorgement in connection with its “unlawful conduct.”
- Along with New York and California, Vermont published a cease-and-desist order along with Washington, followed by Maryland, Oklahoma, South Carolina and Kentucky,
Several US state authorities have filed lawsuits against popular crypto lending platform Nexo for allegedly selling unregistered securities in the states without any permits. California’s Department of Financial Protection and Innovation issued a cease and desist order against the crypto lender on Monday, and it seems that the firm might have to shut shop in the US by the time the hearing takes place.
California’s Department of Financial Protection and Innovation stated that it will join seven state securities regulators to bring down Nexo which offered interests rates as high as 36% to its users on its Earn Interest Product accounts. The lawsuit that was filed by the regulatory agency alleges that the Earned Interest Product accounts are securities which “have been offered and sold without prior qualification, in violation of California Corporations Code section 25110,”
The filing further added that “as of July 31, 2022, over 18,000 California residents have active Earn Interest Product flex- or fixed-term accounts; these accounts collectively hold investments totaling at least $174,800,000,” marking a significant activity on behlf of Nexo crypto lending platform.
“These crypto interest accounts are securities and are subject to investor protections under the law, including adequate disclosure of the risk involved. Collectively, these actions protect investors while ensuring that California remains an ideal setting for responsible financial innovation,”said DFPI Commissioner Clothilde Hewlett.
New York Attorney General Letitia James also filed a lawsuit against Nexo for the sale of unregistered securities along with violation of “the law and investors’ trust by falsely claiming that it is a licensed and registered platform.” Additionally, James added that the crypto lending firm “must stop its unlawful operations and take necessary action to protect its investors.”
It is also important to note that the New York authority wants a complete ban on Nexo and its activities for the near future as according to the lawsuit, “Nexo’s website and other public marketing have repeatedly included material misstatements and omissions regarding the safety and legal compliance of Nexo’s investment products.”
Attorney James also wants Nexo to pay restitution and disgorgement in connection with its “unlawful conduct.”
Along with New York and California, Vermont published a cease-and-desist order along with Washington. This was followed by Maryland, Oklahoma, South Carolina and Kentucky, all of which sued the crypto lending firm and asked for its suspension.
“We have been working with US federal and state regulators and understand their urge, given the current market turmoil and bankruptcies of companies offering similar products, to fulfill their mandates of investor protection by examining past behavior of providers of earn interest products,”said Nexo founder Antoni Trenchev.