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California Fines Crypto Asset Manager Nexo $500,000 for Operating Unlicensed Lending
BlockBeats News, January 16, the Department of Financial Protection and Innovation (DFPI) of California announced a $500,000 fine against the cryptocurrency asset management platform Nexo for providing cryptocurrency-backed loans to at least 5,456 California residents without obtaining a state-level license.
The regulator stated that its investigation found that Nexo's subsidiary, Nexo Capital Inc. (registered in the Cayman Islands), issued loans to consumers and businesses between July 2018 and November 2022 without a valid license, failing to assess borrowers' repayment ability, existing debt, or credit history before lending, thereby violating California's relevant financial regulations.
DFPI Commissioner KC Mohseni said, "Lenders must comply with the law, avoiding issuing high-risk loans that endanger consumers, and cryptocurrency-backed loans are no exception." In addition to the fine, Nexo has been instructed to transfer all California user funds to a licensed U.S.-affiliated entity within 150 days.
This penalty comes as Nexo expresses plans to re-enter the U.S. market. The company previously exited the U.S. market in 2022 under state and federal regulatory pressure. Previously, Nexo reached a total of $45 million in settlements with the U.S. Securities and Exchange Commission (SEC) and multiple state regulators in 2023 for unregistered cryptocurrency lending and yield products.
Analysts point out that this case once again highlights the ongoing high-pressure stance of U.S. regulatory agencies on the compliance of cryptocurrency lending businesses, especially in terms of consumer protection and lending reviews. Nexo has not yet publicly responded to this matter.
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