According to the lawsuit, the company misled customers by saying it was registered to sell securities and commodities and that it wasn't approved to offer services like its "Earn Interest Product". The fight between regulators and companies trying to offer interest-earning accounts has been going on for a long time.
According to a press release from the New York AG, seven other states are also filing "administrative actions" against the company. According to the release, James said thatNexo violated the law and investors' trust by misrepresenting its status. It is necessary forNexo to stop its illegal operations and protect its investors.
The exchanges were ordered by James to stop offering services they weren't authorized to offer in New York. The New York citizens were blocked from accessing the service byNexo. That wasn't true according to the lawsuit. According to the suit, Nexo told the attorney general's office that it was shutting down all of its services in the state by November 11, 2021. According to data provided to regulators by the AG, there were over 5,000 EIP accounts funded by New York investors.
According to the lawsuit, the claims of being a licensed and regulated digital assets institution are false. The company website claims to be in full compliance with all applicable global and local regulations and standards for the areas it operates in. The New York AG says that licenses from Maryland, Oklahoma, and South Carolina are on the list.
The company is working with US federal and state regulators in order to fulfill their mandates of investor protection by examining past behavior of providers of similar products.
According to the statement, Nexo stopped letting new US customers access its earn interest product after the Securities and Exchange Commission released guidance oncryptocurrencies. TheNexo is committed to finding a clear path forward for the regulated provision of products and services in the US The statement doesn't address the accusations that it misstated and omitted information about the "legal compliance" of its products
BlockFi had to pay $100 million in penalties to the SEC after it was found that it wasn't properly registered to provide investment services. If it launched a similar program in 2021, the agency warned it would be sued.
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