Nexo Group, the company under whose umbrella the Nexo lending platform is operating, has been slammed with a filing. According to the report’s details, the filing was submitted by regulators across several US states, including California. The report also claims that the regulators are branding the latest Earn Interest Product released by the firm as unregistered securities. According to the Department of Financial Protection and Innovation, the products released by the firm are securities and, as such, should protect investors.
Nexo launched a product with about 36% interest
The DFPI statement noted that the law mandates Nexo Group to protect their investors, something they have failed to do. Asides from that, they have also refused to clarify the risks involved in purchasing the said product. According to the official statement of the regulators, the recent product that Nexo launched has a 36% interest rate.
This is higher than most of the interest rates across the financial market. In a recent statement by the CEO of Nexo Group, he mentioned that he has been working hand in hand with regulators across states to ensure that its new product complies with all the financial laws across the states. The firm’s CEO, Trenchev, also mentioned that it had stopped US traders from accessing its platform since March when the SEC released a new order.
Lending firms are taking the heat
Aside from the securities regulator in California, regulators from states like Vermont and Kentucky were also involved in the filing. The filing should see Nexo cease the product and desist from making products that mirror it in the future. However, according to its registration details, the platform has a right to operate across Maryland, Oklahoma, and California. Although Washington refused to file an order to cease, the regulator in the state released a statement of charges. A New York judge also filed a lawsuit against the company for charges bordering on illegally misleading investors by saying it is compliant with rules and regulations across the state.
Since June, the lending sector of the crypto market has continued to decline rapidly. Celsius saw its assets frozen while Voyager Digital went bankrupt as a result of 3AC going insolvent. BlockFi was saved at the death by FTX, among other issues. Presently, Nexo is trying to erase rumors that it cannot provide the backing it promised to its users upon their onboarding. Since the period, a couple of firms have dropped in the market due to bankruptcy.
