Nexo to Depart US After Regulator Discussions Hit 'Dead End' (2024)

Crypto lender Nexo said Monday it would stop offering products and services in the U.S. in the coming months, would immediately halt access to its Earn Interest Product in eight states and is no longer signing up any new U.S. customers to the Earn product.

Nexo said it had been in talks with both state and federal regulators in the U.S., but these had come to a "dead end." The company did not provide many specifics about these discussions, but said it had shared information with the regulators and tried to "proactively modify its business" to respond to these law enforcement agencies' concerns.

Nexo had already off-boarded Earn clients in New York and Vermont at those states' regulators' insistence, a blog post said. It will now suspend access to new users in Indiana, Kentucky, Maryland, Oklahoma, South Carolina, Wisconsin, California and Washington. Residents of these states can continue using Nexo's other services.

"It is now unfortunately clear to us that despite rhetoric to the contrary, the U.S. refuses to provide a path forward for enabling blockchain businesses and we cannot give our customers confidence that regulators are focused on their best interests," the blog post said.

The company did not provide a firm timeline for its overall withdrawal from the U.S.

Nexo listed grievances with U.S. regulators throughout the blog post, saying "although regulators initially encouraged our cooperation and a sustainable path forward appeared viable," recent events – hinting at the turmoil caused by FTX's collapse – have created "an impossible environment" for the company to continue operating.

"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 [Securities and Exchange Commission[ and state regulators have simultaneously insisted is a security subject to their jurisdictions," the blog post said.

It also pointed to enforcement actions brought in September by eight different states, including New York and California, alleging that the company's Earn product violated state securities laws.

At the time, Nexo told CoinDesk that it had already "ceased the onboarding of new US clients" for its Earn product.

Crypto lenders in general have had a tough year in the U.S., with many of Nexo's largest competitors, including BlockFi, Celsius Network and Voyager Digital, all filing for bankruptcy protection within the past few months.

Correction (Dec. 5, 2022, 19:30 UTC): Clarifies that new users will not be able to onboard to Nexo's Earn product in several states.