Eight US state regulators have issued stop orders against Nexo, the crypto lending platform behind altcoin NEXO. These regulators are; High yield points to Nexo’s interest-earning product, which offers an unregistered collateral. Here are the details…
Stop order to platform behind altcoin NEXO
Multiple US state regulators have issued cease and desist orders against crypto lending platform Nexo. Eight US states are taking legal action against Nexo for allegedly offering unregistered securities to customers. On Monday, September 26, state regulators in California, Oklahoma, Kentucky, and Vermont announced cease and desist orders against Nexo. New York, South Carolina, and Maryland didn’t exactly use these terms, but they ordered in the same direction.
The allegations relate to Nexo’s “interest earning product,” an interest-bearing account that promises returns of up to 36 percent. Regulators argue that the Interest Earning Product creates unregistered securities and the company fails to provide adequate disclosure to customers. Clothilde Hewlett, California Department of Financial Protection and Innovation Officer, said her department is taking on “aggressive enforcement efforts” against unregistered interest-bearing crypto accounts. Hewlett says such accounts are considered securities and are subject to investor protection and risk disclosure laws.
Nexo did not respond to the news
New York Attorney General Letitia James added that Nexo “violates the law and the trust of investors” by falsely claiming that it is a licensed and registered platform, arguing that it sells unregistered securities and commodities. Vermont’s filing showed that more than 93,000 U.S. residents have invested more than $800 million in Nexo accounts. About 10,000 and 18,000 of these residents are in New York and California.
Nexo did not publish a public response to the news. But in a statement quoted by CNBC, Nexo said it was “working with US federal and state regulators.” The firm also said it is aware of the need to regulate the crypto lending industry due to the ongoing market crisis and bankruptcies among its competitors. The company described itself as “a very different provider of interest-earning products.”
He emphasized that he does not work with unsecured loans, does not invest in crashed TerraUSD and LUNA tokens, does not freeze users’ withdrawals and does not require recovery. cryptocoin.com As we reported, Nexo was a company that survived the market crash this summer, while competitors like Celsius and Voyager Digital suspended withdrawals and declared bankruptcy. The lawsuit filed against Nexo today is similar to the lawsuit filed against BlockFi, which settled $100 million with the US SEC and state regulators for its unregistered status in February.
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