Multiple State Financial Regulators Allege Crypto Loan Platform Nexo Violates Securities Laws

Cryptocurrency lender Nexo is facing regulatory action in eight US states for allegedly offering an investment product that violates securities laws.

state regulators in California, New York, Washington, Kentucky, Vermont, South Carolina, Maryland Y Oklahoma are issuing statements focused on Nexo’s Earned Interest Product (EIP).

The office of South Carolina Attorney General Alan Wilson He says The regulatory actions are the result of a “state securities regulators task force” focusing on interest-bearing cryptocurrency accounts.

“The Division alleges that Nexo violated South Carolina Securities Law by offering and selling unregistered or unqualified securities in the form of its EIP accounts and that Nexo and its co-founders misrepresented and omitted material facts about the EIP accounts.”

The order of withdrawal and abstention issued by California Department of Financial Protection and Innovation Commissioner Clotilde V. Hewlitt He says Nexo could not register the account as security.

“The Commissioner is of the opinion that the Earn Interest Product accounts offered and sold by Nexo Group, Nexo Inc. and Nexo Capital Inc. are securities, in the form of investment contracts, under California Corporation Code section 25019…and have been offered and sold without prior qualification, in violation of section 25110 of the California Corporations Code.”

Before clamping down on Nexo, several state regulators also launched legal action against beleaguered crypto lender Celsius Network.

Regulators in Alabama, Kentucky, New Jersey, Texas, and Washington tried at the company after it halted withdrawals in June.

The California financial services regulator also issued a cease and desist order against the company, alleging that its Earn Rewards accounts offered unregistered securities. The Vermont financial regulator also accuses the company of making false claim (it is about its compliance with securities laws.

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