Nexo is a cryptocurrency lender that has recently been sued due to it unlawfully suspending XRP payments. This had occurred after the decision to suspend payments via XRP had resulted in the loss of millions of dollars in damages this past December.
Nexo has thus certainly drawn the ire of many investors, and at the time of this writing, faces a class-action lawsuit. The damages themselves had amounted to nearly $5 million in total.
Nexo did not have the right to sell the XRP tokens of its users
In Nexo’s defense, the decision to suspend the aforementioned payments had come as a result of the lawsuit that had been filed against Ripple by the United States Securities and Exchange Commission (SEC). Nexo had hence taken matters into its own hands and suspended the capability of users to repay their loans using XRP. Furthermore, the use of XRP as collateral had also been banned. The main thing that investors and consumers alike were extremely upset about was indeed the fact that Nexo had done all of this without informing or notifying the users in any way, thereby losing the trust and confidence of many.
Nexo had therefore prohibited the consumers from maintaining their respective LTV (loan to value) ratios, and in a strange turn of events, had also subsequently gone on to punish those same people for not maintaining said ratios. Nearly hundreds of active customers had been locked out of sustaining the ratios as they were unable to sell the tokens. This had resulted in a plethora of liquidations.
Customers demand that their funds should be recovered
Junhan Jeong is the one to file the initial lawsuit against Nexo on behalf of those who have been affected. He himself had lost nearly $270,000 worth of tokens that he had put down as collateral. Nexo had originally claimed to have ‘owned’ any crypto assets that the consumers posted as collateral, and Jeong stated that if this were to be the case, then it would be incredibly unfair to the customers. He also complained that Nexo does not supply any real negotiating power through its various terms and conditions and that it does tend to impose these very conditions on consumers without actually negotiating or consulting with them beforehand.
Customers want their funds back and quickly, and many feel this is a perfectly reasonable claim to make. The LTV ratios have to be maintained, and Jeong has now asked the court to award the affected consumers with damages, the amount of which shall be determined at a future trial. Lastly, if things go the way of the affected customers, then the plaintiff could additionally be given any other form of relief that might be deemed appropriate.