Finance Market Analysis

New York, California among US states to bring enforcement actions against Nexo

Regulators across multiple US states have announced enforcement actions against crypto lender Nexo, with cease-and-desist orders from some over Nexo’s interest-bearing crypto product.

On Monday afternoon, at least eight states had variously filed actions against the leading crypto lender. A CNBC report noted that New York, California, Oklahoma, Maryland, Kentucky, South Carolina, Vermont and Washington had all brought actions.

New York Attorney General Letitia James sued the crypto company for failing to register and for lying to investors.

I’m suing crypto platform @Nexo for illegally failing to register with my office and lying about it to investors.

Instead of misleading New Yorkers about its compliance with the law, crypto platforms must register to operate just like other investment platforms.

— NY AG James (@NewYorkStateAG) September 26, 2022

Between at least June 2020 to the present, the Defendants, operating through their publicly accessible website and mobile smartphone app, which allow users to purchase, sell, deposit, trade, borrow against, and earn interest on virtual currency, violated New York’s Martin Act and Executive Law by acting as unregistered securities brokers or dealers and/or commodities broker-dealers,” the New York Attorney General’s complaint reads.

The other state regulators are also accusing Nexo of offering its yield account to customers within their jurisdictions without the requisite registrations needed for securities. The crypto platform’s failure to provide disclosures is an accusation across the enforcement actions.

In its press release, California’s Department of Financial Protection & Innovation (DFPI) said:

The California Department of Financial Protection and Innovation (DFPI) announced today it has joined seven state securities regulators to bring actions against the Nexo Group (Nexo) in connection with its Earn Interest Product accounts.”

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