- Eight states in the US are filing a lawsuit against crypto-lending platform Nexo.
- Nexo apparently offered customers interest-earning accounts without first registering them as securities.
- Moreover, the platform, allegedly, did not provide necessary disclosures.
According to the latest news from CNBC, eight states in the United States declared that they are taking action against the popular crypto-lending platform Nexo Group. This decision is in connection with the platform’s unregistered, interest-bearing cryptocurrency product.
The allegations in connection with this case are that Nexo offered customers interest-earning accounts without first registering them as securities and providing necessary disclosures. The case was filed by state regulators in California, Kentucky, New York, Maryland, Oklahoma, South Carolina, Washington, and Vermont.
Among other accusations, the filing also claimed that Nexo misrepresented accounts and suggested to investors that it is a licensed and registered platform.
Regarding the case, New York’s Attorney General Letitia James, who filed the lawsuit against the cryptocurrency platform, said:
Nexo violated the law and investors’ trust by falsely claiming that it is a licensed and registered platform. Nexo must stop its unlawful operations and take necessary action to protect its investors.
James also added that cryptocurrency platforms were not exceptional and that they must register to operate just like any other investment platform.
Nexo responded to these statements claiming that they have been working with U.S. federal and state regulators. They also argue that Nexo is a very different provider of earn interest products, as showcased by the fact that it did not engage in uncollateralized loans, had no exposure to LUNA/UST, did not have to be bailed out, or needed to resort to any withdrawal restrictions.
This case comes at a time when cryptocurrency bankruptcies have become the norm and when several platforms failed in the last few months alone. Celsius is a classic example of this disastrous trend. Voyager is yet another major platform that failed and filed for bankruptcy.
As a result of these collapses, millions of investors do not have access to their funds. US regulators are attempting to protect investors from further losses.