Crypto Lending Firm Nexo Announces To Leave the US Because Of Lack Of Regulatory Clarity
Nexo, a crypto lending company and exchange, will put a stop to its product offerings in the United States market and leave the country as it demands clear regulations and considers it troublesome to move with the existing ones. Beginning on the 6th of December this year, the platform will terminate the Earn Interest Product in Washington, California, Wisconsin, South Carolina, Oklahoma, Maryland, and Kentucky.
Nexo Gets Irritated with Unexpected Regulations
Until the issuance of any further notice, the consumers of the company will be permitted to access the rest of its crypto-related product offerings. Nexo has formerly been taking many measures to abide by the concerns of the regulatory agencies, taking into account the offboarding of consumers belonging to Vermont and New York.
However, it stated that it has become exhausted because of the turf clashes between the government-related organizations that have problematized its endeavors to become a compliant entity. Nexo additionally mentioned frustration at many states which are taking measures against the firm without issuing a prior notice. Thus, it decided to quit the market of country.
A blog post was published by Nexo in which it disclosed that keeping in view the challenges related to the contradictory and puzzling regulatory structure of the United States, it is compelled to carry out a gradual and systematic exodus from the US. It added that they will focus on creating services and products for the jurisdiction where the significance of blockchain technology would be taken into consideration.
Notwithstanding the termination of the Earn Interest Product of Nexo, it has guaranteed the consumers that the payment processors of the firm will keep on doing the withdrawal processing. Recently, it secured registration as a Virtual Currency Operator under Organismo Agenti e Mediatori (a finance watchdog in Italy).
Rich Investors Sue Nexo for Restricting Withdrawals
Though Nexo claims to have substantial assets to cope with withdrawals, rich investors sued it recently for halting withdrawals in 2021’s March, claiming that the firm restricted them from extracting proportions of their assets of up to $126 million worth. The accusers asserted that the platform halted their accounts as well as attempted to push them to trade their funds in NEXO (the local token of Nexo) at a discount of sixty percent.
The platform discharged the apprehensions related to its liquidity following Celsius (a crypto lending firm) witnessed a liquidity shortfall earlier in 2022, leading it to halt the withdrawals. Celsius got involved in complex and high-risk trades to offer what eventually turned out to be unsustainable returns of nearly eighteen percent.
Similar to Celsius, Nexo allured regulators in several states in the US, who alleged it of providing the Earn Interest Product thereof as an unregistered security. Dylan LeClair, a senior analyst at UTXO Management, mentioned on the 27th of November that the stablecoin deposits-related yield offerings of Nexo are nearly ten times greater than Compound and Aave (the decentralized lenders).
As per him, yields greater than the market rate can be associated with taking “directional hazards.” Though the platform might be troubled, its position is that of a crypto firm that generates funds with the utilization of the conventional banking model, offering decreased returns in comparison with the interest charged y it from the borrowers without providing the advantage of a lending company of last resort.
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