Although Nexo had to officially halt the service, the watchdog claims there were loopholes.
Cryptocurrency lender Nexo has come under fire from California regulators and seven other US state securities watchdogs for its unregistered crypto interest account program, which the authorities classified as securities.
Notably, some crypto lenders offering similar programs in the United States faced similar actions in the past from US regulators.published on Monday , California’s Department of Financial Protection and Innovation announced that Nexo’s Earn Interest Product account, with annual interest rates as high as 36%, was offered to California residents without being registered as securities.
According to a desist and refrain order filing, the DFPI claimed that while Nexo claimed to have stopped serving the product to US investors since February 19, 2022, clients were still able to use the interest-bearing cryptocurrency account using the lender’s automatic renewal feature. Furthermore, the California regulator alleged that more than 18,000 residents in the state were actively using the Earn Interest Product as of July 31, 2022. The DFPI earlier said the agency is conducting an active investigation into companies offering crypto interest accounts.“The DFPI has undertaken aggressive enforcement efforts against unregistered interest-bearing cryptocurrency accounts.
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