Nexo Group, the company under the umbrella of the lending platform Nexo operates, was hit by a statement. According to the report, the request was made by regulators in several US states, including California.
The report also claims that regulators classify the latest interest-bearing products launched by the company as unlisted securities. According to the Ministry of Financial Protection and Innovation, the products issued by companies are securities and therefore must protect investors.
Nexo launches a product with an interest rate of about 36%
The DFPI statement said the law required Nexo Group to protect its investors, which it failed to do. They also declined to explain the risks involved in purchasing the product. According to an official statement from the regulator, the last product that Nexo launched had an interest rate of 36%.
This is higher than most interest rates in financial markets. In a recent statement from the CEO of Nexo Group, he mentioned that he is working closely with state regulators to ensure the new product complies with all state finance laws. The company’s CEO, Trenchev, also mentioned that it has banned US traders from accessing its platform since March, when the SEC issued a new order.
Lending companies take the heat
In addition to the California Securities Commission, regulators from states such as Vermont and Kentucky are also involved in the filing. Submissions must ask Nexo to discontinue the product and refrain from making products that reflect this in the future.
However, according to registration data, the platform is allowed to operate in Maryland, Oklahoma, and California. Although Washington refused to file a termination and termination order, state regulators filed a lawsuit. A New York judge also sued the company on charges bordering on illegally misleading investors, saying it complied with statewide rules and regulations.
Since June, the credit sector of the crypto market has continued to decline rapidly. Celsius’ assets were frozen while Voyager Digital went bankrupt due to the bankruptcy of 3AC.
BlockFi was saved to death by FTX, among other things. Nexo is currently trying to dispel rumors that it can’t offer its users the support it promised when they signed up. Since then, several companies have gone bankrupt.