“Nexo has violated the law and the trust of investors by falsely claiming that it is a licensed and registered platform. Nexo must end its illegal operations and take the necessary measures to protect its investors. »
Nexo is being sued by eight U.S. securities regulators, including the New York Attorney’s Office headed by Attorney General Letitia James.
The cryptocurrency group’s two entities, Nexo Inc. and Nexo Capital, are accused of failing to register with the state as brokers or dealers in securities and commodities and of lying to investors on their registration status.
According to the complaint, Nexo failed to register and told investors that it was a licensed and registered platform.
The lawsuit alleges that Nexo promoted and sold securities in the form of an interest-bearing virtual currency account called the Interest Product with promises of high returns for participating investors, while failing to register as a broker or dealer in securities as required by state law.
Additionally, the lawsuit alleges that Nexo engaged in unregistered buying and selling of securities and commodities through its virtual currency trading platform called Nexo Exchange, and misled investors by falsely stating that it was in compliance with applicable laws and regulations. About 10,000 New Yorkers have accounts with Nexo.
“Cryptocurrency platforms are not exceptional”
New York Attorney General James said, “Cryptocurrency platforms are not exceptional; they must register to operate like other investment platforms. Nexo has violated the law and the trust of investors by falsely claiming that it is a licensed and registered platform. Nexo must end its illegal operations and take the necessary measures to protect its investors. »
In New York, entities engaging in the offering, buying, or selling of securities or commodities, including cryptocurrency platforms, must register with the OAG despite operating in the state or offer their products to New Yorkers. Through his lawsuit, Attorney General James is seeking restitution of all proceeds from Nexo’s unlawful conduct and restitution to investors.
NYAG James is seeking restitution for thousands of defrauded investors, restitution of proceeds from Nexo’s illegal conduct, and permanent injunctions against defendants’ violations of state law.
The New York Attorney’s Office has been busy when it comes to crypto, having recently reached a nearly $1 million settlement with crypto platform BlockFi Lending LLC for offering unregistered securities.
Earlier this year, Attorney General James issued a Taxpayer Notice to virtual currency investors and their tax advisors to accurately report and pay taxes on their virtual investments.
In October 2021, Attorney General James ordered unregistered crypto lending platforms (including Nexo) to cease operations for failing to fulfill their legal obligations. In March 2021, Attorney General James warned New Yorkers of the risks of investing in cryptocurrency and reminded investment platforms of their legal obligations.
New York Attorney General James is urging New Yorkers who have been impacted by deceptive conduct in the virtual asset market to report such issues to the OAG. She also encourages workers in the cryptocurrency industry who may have witnessed misconduct or fraud to file a whistleblower complaint with her office, which can be done anonymously.