Crypto lender Nexo is facing issues with government officials from California, New York, Washington, Kentucky, Vermont, South Carolina and Maryland. Enforcement actions from several state securities regulators allege that Nexo’s Earned Interest Product (EIP) may be in violation of securities laws.
Nexo has been targeted by a number of security regulators over the interest-bearing product of the crypto lender
Following last year’s scandals involving Celsius and Bloffy’s interest-dealing accounts, crypto lender Nexo has been targeted by several government securities regulators over the company’s interest-bearing product (EIP). The state of California asserted that since June 2020, Nexo “offered and sold non-qualified securities in the form of Earned Interest Product accounts to the public of the United States and residents of California.”
New York State and Attorney General Letitia James filed suit against Nexo. Similarly, New York State and James said Nexo began offering EIPs around June 2020, and to date. James Nexo violates New York’s Martin Law and acts as an “unregistered securities broker or dealer.” Washington is saying the same, and the Washington Securities Division notes that several states are united in their enforcement actions.
Kentucky, Vermont, South Carolina and Maryland have all filed similar actions against Nexo, and most of the complaints are ordering Nexo to cease and desist from current operations related to the firm’s interest-bearing accounts. In the year Similar enforcement actions were taken against Celsius before the company went bankrupt in 2021. In 2021, Blockfi was targeted by several state securities regulators, and in February 2022, Blockfi was sued by the US Securities and Exchange Commission (SEC).
Blockfi decided to settle with the SEC and paid $100 million in fines. Crypto lenders have had significant issues this year, and when rumors spread that Celsius was insolvent, Nexo offered to buy the company’s assets. BlockFi says it was not exposed to Celsius Zero, but when Celsius stopped the outage, the move led to a “significant increase in customer withdrawals” on the BlockFi platform.
But BlockFi had exposure 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 was tweeting on September 26, but the crypto-lender did not issue a statement regarding the shutdown and security regulators issuing the warrants. Three days ago, the NFT lending desk one Ask Me Anything (AMA) A session featuring Nexo’s co-founder and managing partner.
What do you think of the eight monitors targeting Nexo on Monday? Let us know what you think about this in the comments section below.
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