California’s Department of Financial Protection and Innovation issued a cease and desist against Nexo over its crypto interest-bearing accounts. The cease-and-desist document alleges that Nexo's Earned Interest Product accounts are securities and "have been offered and sold without prior qualification, in violation of California Corporations Code section 25110. As of July 31, 2022, over 18,000 California residents have active Earn Interest Product flex- or fixed-term accounts; these accounts collectively hold investments totaling at least $174,800,000," the filing said.
In a separate announcement, New York Attorney General Letitia James announced a lawsuit against Nexo. "Nexo violated the law and investors’ trust by falsely claiming that it is a licensed and registered platform. Nexo must stop its unlawful operations and take necessary action to protect its investors," James said in a statement. New York is seeking to permanently bar Nexo from selling securities in the state, per the complaint.
Vermont published a cease-and-desist order and Washington released a statement of charges ahead of a cease-and-desist order of its own. Following the publication of this report, Maryland, Oklahoma, South Carolina and Kentucky published their enforcement action documents.
Policy and Regulation
Lending
