Latest news about Bitcoin and all cryptocurrencies. Your daily crypto news habit.
In an announcement on Monday, about eight states individually filed legal actions against Crypto lender platform Nexo. California’s Department of Financial Protection and Innovation (CDFPI), New York, amongst several others announced a lawsuit against the platform.
Nexo created an Earn Interest Product (EIP) account which was not registered. The accounts are securities and by the law are subject to investors’ protection.
The accounts enable investors to deposit crypto assets with Nexo and in return, they earn interest on the deposits. The platform offered 12%-36% annual interest rates on investors’ deposited crypto assets.
Significantly, the interest rates are higher than rates for short-term, fixed income securities, investment grade as well as bank savings accounts. The platform went further to offer product accounts to California residents without qualifying the accounts as securities. Its action violated the California Corporations Code Section 25110.
The CDFPI has issued Nexo a cease and desist letter and ordered it to refrain from selling and offering securities in the state.
Similarly, New York Attorney General Letitia James also announced a lawsuit against the crypto lender.
The platform violated the Martin Act and Executive Law by falsely saying it complies with the regulations and licensing requirements. It also sold virtual currencies purchased on its marketplace known as the “Exchange” as well as pooled investments referred to as “Earn Interest Products” to New York residents.
Although Nexo has taken some steps to address the violation of New York law, it still secretly continued its unlawful acts. Last year the state issued Nexo a cease and desist letter due to the fact that it has refused to obey the law. Hence, the state shut it from carrying out operations.
Crypto Lenders Bow to the Market Heat
Aside from Nexo, other crypto lenders have also felt the heat of the crypto market. Celsius network as reported by thecoinrise filed for Chapter 11 Bankruptcy in New York a month after it halted withdrawals amidst insolvency fears.
The post Eight US State Regulators Slams Nexo with Cease and Desist Order appeared first on Blockchain, Crypto and Stock News.
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.