Crypto Lending Platform Nexo Responds To Enforcement Actions From Multiple State Regulators

Crypto lender Nexo has released a statement regarding the enforcement actions it faces from eight different states regarding its Earn Interest (EIP) product.

Earlier this week, state regulators in California, New York, Washington, Kentucky, Vermont, Caroline from the south, Maryland and Oklahoma made allegations that Nexo violated securities laws with EIP.

In a new blog post, Nexo said it has always aimed to be a sustainable and compliant company.

“We have worked with U.S. federal and state regulators and understand their urge, given the current market turmoil and bankruptcies of companies offering similar products, to fulfill their mandate to protect investors by reviewing the past behavior of service providers. products at interest.”

The company says it no longer accepts new US accounts and balances for EIP since the US Securities and Exchange Commission (SEC) took a stance on interest-bearing accounts from crypto lending platforms.

“Since the SEC’s Earn Interest Product Guidelines, dubbed “The BlockFi Order” in February 2022, Nexo has voluntarily ceased onboarding new US customers for our Earn Interest product and discontinued the product for new balances for existing customers.”

The company is also responding to criticism that it may be offering unrealistic interest rates to its customers. Nexo clarifies that it only offers 36% interest on Axie Infinity (AXS), which currently has a 60% staking reward, but gives sub-single-digit interest on nearly everyone else.

“Our rates for the vast majority of assets are in the single digit percentages. For the most popular assets, including Bitcoin, Ethereum and stablecoins, we offer balance limits, where clients earn a lower return above certain amounts.

Our pricing is always determined with consideration of the underlying sustainability of our business and the security of client assets. An overview of the latest changes to our Earn Interest product can be found here, where it is stated that interest rates for Bitcoin, for example, are nominal and vary between 1.5% and 7%.

We are paying interest rates of up to 36% for a single asset, Axie Infinity’s AXS, where the current staking reward is almost 60%. This rate, however, is an exception, and we do not advertise the percentage in our marketing materials.

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