California and New York Join Several States Ordering Crypto Lender Nexo to Stop Yield Product
California, New York and six other states are suing Nexo cryptocurrency lending platform to offer unregistered securities in the form of accounts that pay interest for cryptocurrency deposits, states said in statements In Monday.
The New York action specifically accused Nexo Inc. of misrepresenting its registration status.
“Nexo has violated the law and violated investor trust by falsely claiming it is a licensed and registered platform,” said New York Attorney General Letitia James, who asks the company to forfeit revenue from its product and compensate customers. “Nexo must end its illegal operations and take the necessary steps to protect its investors.
Switzerland-based Nexo has yet to post a comment in response to the state actions.
The states — also including Washington, Maryland, Kentucky, Oklahoma, South Carolina and Vermont — filed individual suits targeting Nexo’s “Earn Interest Product” accounts. Nexo advertises the accounts as “high yield” and California noted that the company offers annual interest rates of up to 36%.
“These crypto interest accounts are securities and are subject to investor protections under the law, including adequate disclosure of the risk involved,” said Clothilde Hewlett, commissioner of the California Department of Financial Protection and innovation.
Crypto companies BlockFi, Voyager Digital and Celsius Network Inc. have been subject to similar regulatory action.
UPDATE (September 26, 2022, 7:09 PM UTC): Adds more states comments