Crypto lending giant, Nexo, is set to restructure its UK operations, following allegations of illegal activities in Bulgaria. According to co-founder Antoni Trenchev, the firm will dissolve Nexo Financial Services Ltd. and Nexo Clearing and Custody Ltd., two of its UK subsidiaries. Despite this strategic retreat, Nexo will maintain a presence in the UK market, focusing on enhancing its customer service and business approach in the area.
Nexo Under Investigation Over Alleged Unlawful Conduct
Bulgaria’s authorities have launched a comprehensive probe into Nexo following claims of computer fraud, tax evasion, money laundering, and other criminal offenses. The platform has reportedly processed transactions worth about $94 billion over the past five years. Prosecutors have pointed out that at least one user of the platform might be involved in funding unlawful and terrorist activities. Nexo has been cooperative with the investigations, aiming to clear any wrongdoing.
Nexo Grapples with US Regulatory Challenges
Nexo is also grappling with regulatory scrutiny in the United States. The US Securities and Exchange Commission (SEC) has accused the company of failing to register its crypto asset lending product’s sale and offer. To resolve these charges, Nexo has agreed to pay a significant $45 million fine. Half of this sum serves as a penalty for offering an unregistered product, and the remainder is to settle similar allegations from state regulatory bodies.
Nexo also faced backlash from regulatory authorities in eight US states for allegedly promoting its product without the required securities registration and not providing sufficient disclosure to its customers.
Nexo’s Challenges Represent a Defining Moment for Crypto Lending
The ongoing legal battles and restructuring of Nexo mark a pivotal moment for the firm and the larger crypto industry. As regulators worldwide scrutinize Nexo’s operations, the results of these probes could significantly influence the regulatory framework for cryptocurrency lending platforms in the future. Nexo’s experience underscores the industry’s need for regulatory compliance and transparency to thrive amidst increasing scrutiny.
