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Nexo announced the plans to discontinue its Earn Interest Product citing an investigation from the federal Consumer Financial Protection Bureau.
On Monday, December 5, cryptocurrency lender Nexo announced its plans to phase out its US products and services citing a regulatory ‘dead end’. Calling it ‘regrettable’, Nexo said that the decision comes amid its recent clashes with regulators.
Nexo said that they have engaged in dialogue with the US state and federal regulators for the last 18 months. However, the “inconsistent and changing positions among state and federal regulators” led to no proper conclusion.
The crypto lender also alleged the US regulators for providing no clear path for enabling blockchain businesses. Crypto lenders like Nexo act like banks in the crypto space. They offer their customers interest in digital currency deposits with the platform.
As we know, crypto lenders have faced major trouble during the crypto winter of 2022. Some of the top crypto lenders like Voyager Digital and Celsius Network have announced bankruptcies this year after failing to meet the liquidity demand from their customers.
Nexo to Discontinue Its Earn Interest Product
The crypto lender also announced that starting today, December 6, it will discontinue its Earn Interest Product citing an investigation from the federal Consumer Financial Protection Bureau. In its announcement, Nexo noted:
“This was made crystal clear by the Consumer Financial Protection Bureau’s (CFPB) decision this past Thursday insisting it has jurisdiction to investigate our Earn Interest Product, which the SEC and state regulators have simultaneously insisted is a security subject to their jurisdictions”.
Last Thursday, the CFPB rejected a petition from Nexo to stop their investigation into the matter. The crypto leader had argued that only the securities regulators have jurisdiction over it. “In addition, a number of the very state securities regulators we had been cooperating with for several months blindsided us by filing actions against us without advance notice,” added Nexo.
California’s Department of Financial Protection and Innovation said that Nexo’s interest-earning products offered promises of interest rates as high as 36%. However, Nexo defended its position stating that it was available only for one product while adding that it didn’t advertise the high rate.
As the company plans to withdraw from the United States, the crypto lender said that they would still process withdrawals in ‘real-time’. It also has a large portion of its operations in Bulgaria.
While its peers like BlockFi, Celsius, and Voyager, have announced bankruptcy this year, Nexo has still managed to stay afloat.
Other crypto news can be found here.