More Than a Half Dozen US Securities Regulators File Actions Against Nexo

• Blockfi paid $100 million in penalties
• Blockfi’s CEO said the firm lost $80 million from the bankrupt company
• Kentucky, Vermont, South Carolina, etc have all filed similar actions against Nexo

State authorities from California, New York, Washington, Kentucky, Vermont, South Carolina, and Maryland are having issues with crypto lender Nexo. It is clear from the enforcement actions taken by a number of state securities regulators that Nexo’s Earn Interest Product (EIP) may have broken securities laws.

Nexo Has Been Targeted by Several Securities Regulators Concerning the Crypto Lender’s Earn Interest Product

Following the issues that occurred last year with the interest-bearing accounts of Celsius and Blockfi, the crypto lender Nexo has been targeted by a number of state securities regulators with regard to the Earn Interest Product (EIP) of the company.

Nexo has been accused of offering and selling unqualified securities, in the form of Earn Interest Product accounts, to the United States public at large and to California residents by the state of California since June 2020.

Nexo was sued by the state of New York and its attorney general, Letitia James. Similarly, James and the state of New York assert that Nexo began offering EIPs in June 2020 and continues to do so today.

James asserts that Nexo acted as unregistered securities brokers or dealers in violation of the Martin Act of New York. The securities division of Washington stated that several states are participating in the joint law enforcement actions, and Washington concurs.

Similar lawsuits have been filed against Nexo by the states of Kentucky, Vermont, South Carolina, and Maryland. Many of the complaints require Nexo to cease all current activities related to the company’s interest-bearing accounts.

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Blockfi decided to settle with the SEC

Before Celsius filed for bankruptcy in 2021, similar actions were taken by law enforcement against the company.

In 2021, Blockfi was also targeted by a number of state securities regulators, and the U.S. Securities and Exchange Commission (SEC) charged Blockfi in February 2022.

Blockfi settled with the SEC and agreed to pay $100 million in fines. This year, crypto lenders have faced significant difficulties, and Nexo offered to acquire Celsius’s assets when word spread that the company was bankrupt. Blockfi explained that it had no exposure to Celsius, but the move caused a significant uptick in client withdrawals on the Blockfi platform when Celsius stopped accepting withdrawals.

Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.

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