Crypto News

California regulators direct Nexo to suspend crypto interest accounts

Cryptocurrency lender Nexo has come under fire from California regulators and seven other U.S. securities regulators for its unregistered crypto interest account program, which authorities classified as securities.

In particular, some crypto lenders that offer similar programs in the United States have faced similar actions from US regulators in the past.

California Slams injunctive relief and omission of orders against Nexo

in one expression The California Department of Financial Protection and Innovation (DFPI), published on Monday (September 26, 2022), announced that Nexo’s Earn Interest Product account with annual interest rates of up to 36% has been offered to California residents without being registered as a security .

According to a cease-and-desist order, the DFPI claimed that while Nexo claimed it would no longer ship the product to US investors as of February 19, 2022, customers could still use the interest-bearing cryptocurrency account with the lender’s auto-renewal feature.

Additionally, the California regulator claimed that more than 18,000 state residents were actively using the Earn Interest Product as of July 31, 2022. The DFPI previously said that the agency is conducting an active investigation into companies offering crypto interest accounts.

Commenting on the latest development, Clothilde Hewlett, DFPI Commissioner said:

“The DFPI has engaged in aggressive enforcement efforts against unregistered interest-bearing cryptocurrency accounts. These crypto interest accounts are securities and are subject to legal investor protections, including appropriate disclosure of the risk involved. Collectively, these actions protect investors while ensuring that California remains an ideal place for responsible financial innovation.”

The California authority carried out similar actions against other crypto lenders such as e.g Celsius, BlockFi and Voyager Digital. During BlockFi paid a $100 million fine to the US Securities and Exchange Commission (SEC) and 32 other states, Celsius and Voyager, recently filed for Chapter 11 bankruptcy.

New York is suing Nexo

New York Attorney General Letitia James also filed a lawsuit against Nexo, assert that the crypto lender “misrepresented to investors that they are a licensed and registered platform.”

Attorney General James is demanding “recovery for thousands of defrauded investors, return of proceeds from Nexo’s illegal conduct and permanent injunctions against the defendants’ violations of state law.” About 10,000 New York residents had accounts with the crypto lender, according to the New York Attorney General.

In addition to California and New York, six other state securities commissions from South Carolina, Kentucky, Vermont, Maryland, Oklahoma and Washington took action against Nexo.

Source: Crypto News Deutsch

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button