According to US broadcaster CBNC, state regulators in California, New York, Kentucky, Maryland, Oklahoma, South Carolina, Washington, and Vermont allege that Nexo offered its customers interest-bearing accounts without first registering them as securities and providing the necessary financial reports.
Without those financial statements, investors wouldn’t be able to make informed decisions, authorities say.
Investigators also say that Nexo misled investors that they were a licensed platform with a deposit product that yielded returns of up to 36%.
However, Nexo admits that only one of their products carries 36% interest, in a Premium package for the lesser-known cryptocurrency Axie Infinity. The rest are pegged to the most famous cryptocurrencies Bitcoin and Ethereum, and their yield is between 7% and 8%.
The main charge against the company is illegal operations and defrauding investors.
Last year, Nexo got into trouble in New York State for offering securities without the necessary license.
The documents then revealed that the bank has more than 93,000 customers in the US, who mainly use their Earn product, with about $800 million in their accounts.
In 2020, a group of the bank’s clients from the state of California filed a lawsuit because the currency they had invested in, Ripple, was liquidated.