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The California Department of Financial Protection and Innovation (DFPI) has filed an injunction against cryptocurrency lending platform Nexo as part of an ongoing investigation into companies offering interest-bearing cryptocurrency accounts.The agency claims it is joining regulators in seven other American states to take action against the company. that is Kentucky, New York, Maryland, Oklahoma, South Carolina, Washington and Vermont, according to CNBC.
DFPIMore claimed In the filing, Nexo’s earned interest products were ineligible securities, ie, securities not approved by the government for sale in the form of investment contracts. The product offered interest of up to 36% per annum.
Following the $100 million fine imposed on BlockFi by the Securities and Exchange Commission, the product will not be available to new US users after February 19, and existing US account holders will not be able to add new deposits to their accounts. could not be After the BlockFi Interest Account is found to be an unregistered security. However, the DFPI filing claims that her auto-renewing Nexo account holders continue to receive interest payments.
Related: Nexo Commits Another $50 Million Buyback Program Amid Crypto Winter
DFPI announced in July that it would begin investigating companies offering so-called cryptocurrency accounts. DFPI Commissioner Her Clotilde Hewlett said in her statement announcing the action against Nexo:
These crypto interest rate accounts are securities and are subject to investor protections under law, including proper disclosure of associated risks.
DFPI issued a consent order against Celsius Network on August 8, alleging that the company and its CEO, Alex Mashinsky, made false representations and omissions in offering cryptocurrency interest accounts. Celsius filed for bankruptcy on July 14.
DFPI also filed an injunction against Voyager Digital on June 3, about a month before Voyager Digital filed for bankruptcy. California Governor Gavin Newsom on Sept. 23 rejected a bill that would establish a framework for state licensing and regulation of digital assets, calling the move “premature.”
