More Than a Half Dozen US Securities Regulators File Actions Against Crypto Lender Nexo – Regulation Bitcoin News
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Cryptolender Nexo has issues with state authorities in California, New York, Washington, Kentucky, Vermont, South Carolina and Maryland. Enforcement actions by several state securities regulators indicate that the Nexon Earn Interest Product (EIP) may be in violation of securities laws.
Several securities market authorities are targeting crypto lender Nexo’s interest rate products
Following issuances against interest-bearing accounts by Celsius and Blockf last year, cryptolender Nexo has been targeted by several government securities regulators over the company’s Earn Interest Product (EIP). The state of California claims that since June 2020, Nexo has “offered and sold securities in the form of Earn Interest Product accounts to the general public in the United States and residents of California.”
New York State and Attorney General Letitia James filed suit against Nexo. Likewise, New York State and James say Nexo began offering EIP around June 2020, up until today. James alleges that Nexo is violating New York’s Martin Act and acting as “unregistered securities brokers or dealers.” Washington says the same thing, and the Washington Department of Securities mentioned that several states are working together on enforcement.
Kentucky, Vermont, South Carolina and Maryland have all filed similar lawsuits against Nexo, with many of the complaints requiring Nexo to cease and desist from the company’s current interest-bearing account operations. Similar enforcement actions were taken against Celsius in 2021 before the company went bankrupt. Blockfi was also targeted by several government securities regulators in 2021, and in February 2022 Blockfi was brought against Blockfi by the US Securities and Exchange Commission (SEC).
Blockfi decided to settle with the SEC and paid $100 million in fines. Cryptolenders have had significant problems this year, and when rumors swirled that Celsius was insolvent, Nexo offered to buy the company’s assets. Blockfi explained that it had no exposure to Celsius, but when Celsius suspended withdrawals, the move caused a significant “increase in customer withdrawals” on the Blockfi platform.
However, Blockfi was exposed to now-defunct crypto hedge fund Three Arrows Capital (3AC), and Blockfi’s CEO said the company lost $80 million from the bankrupt company. Nexo has tweeted on September 26, but the crypto-lender has not issued a statement about securities regulators issuing cease-and-desist orders. Three days ago, the NFT lending point arranged ask me anything (AMA) a session with Nexo’s founder and the company’s CEO.
What do you think of the eight regulators that targeted Nexo on Monday? Let us know what you think about this topic in the comment section below.
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