The all-in-one crypto platform Nexo received a cease and desist order in the US state of California. The order, which was filed by the Department of Financial Protection and Innovation (Department of Financial Protection and InnovationDFPI) of California, alleges that Nexo offered and sold “unqualified securities” through this program.
In the document, the DFPI estimates that as of July 2022, more than 18,000 California residents had accounts with the program and held investments of at least $174.8 million. However, Nexo has not registered with the state regulator to offer these investment services to Californians.
“The Commissioner has not issued any license or other form of authorization permitting Nexo, Nexo Inc. or Nexo Capital Inc. to offer or sell any securities, including Earn Interest Product accounts, in California. The offers and nor are sales of these titles subject to any exception, exemption or other form of qualification,” the document states.
Securities regulators in seven other states, including New York, Kentucky, Maryland, Oklahoma, South Carolina, Washington and Vermont, all simultaneously initiated their own administrative actions against Nexo.
In a statement, the New York Attorney General, Letitia James, said his office was suing the lender for failing to register as a securities and commodities broker despite warnings, and also for misrepresenting itself to investors as an authorized and registered platform. Ms James intends to force Nexo to give up all the income it has earned from doing business in the state.
“Instead of fooling New Yorkers about its compliance with the law, crypto platforms must register to operate like other investment platforms,” she added in a statement. tweet.
Nexo says it has always tried to comply with regulations
According to a CNBC article, Nexo said in response to the allegations that it is working with US federal and state regulators and understands their concern, especially in the face of multiple bankruptcies in the crypto market.
However, Nexo has tried to reassure the public that it has nothing in common with the interest product providers operating in the market, as evidenced by its performance over the past few months.
“Nexo is a very different provider of variable interest products, as evidenced by the fact that it did not engage in unsecured lending, that it had no exposure to LUNA/UST, that it did not ‘has not had to be bailed out or that it has not had to resort to withdrawal restrictions,’ the statement read.
Last February, Nexo banned its new US customers from subscribing to its interest-bearing products. Meanwhile, amid similar regulatory actions, the crypto lending platform BlockFi was ordered to pay a $100 million settlement to the SEC and 32 state regulators.
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