• The California Department of Financial Protection and Innovation (DFPI) made the announcement on September 26 to bring action against the Nexo Group.
  • The DFPI took these actions, citing a lack of securities registration despite offering lending services to California residents.
  • Along with the call for action, California also issued a cease and desist notice for Nexo over its Earned Interest Product (EIP) accounts.

As crypto adoption across the world grows, regulators and law enforcement agencies would also naturally widen their watch over this market, and the effects of the same are visible.

The most recent company to be targeted is the cryptocurrency lending protocol, Nexo, which has been given a cease and desist notice from the California regulatory department.

Nexo gets a big NO

In a press release on September 26, the DFPI stated that it would be joining seven state securities regulators to take action against the Nexo Group (Nexo). 

The regulator stated that they are following their previous aggressive enforcement efforts against unregistered interest-bearing crypto accounts. 

Adding to the same, the announcement read,

“These crypto interest accounts are securities and are subject to investor protections under the law, including adequate disclosure of the risk involved. Collectively, these actions protect investors while ensuring that California remains an ideal setting for responsible financial innovation.”

According to the DFPI, Nexo’s EIP accounts, which offered up to a 36% annual interest rate, were offered to the residents of California without being registered with the authorities.

Nexo comes to an end in California

The DFPI did not stop at just pursuing legal actions against Nexo but also issued a cease and desist notice citing similar reasons for lack of securities registration. 

The Commissioner of Financial Protection and Innovation specified that no permit was issued to Nexo for selling securities. Despite the same, over 18,000 California residents collectively held about $174.8 million in these accounts as of July 31, 2022.

DFPI followed similar actions against BlockFi Lending LLC, Voyager Digital LLC, and Celsius Network Inc. BlockFi is facing a $100 million penalty from the SEC, and the latter two filed for Chapter 11 bankruptcy.

What the future holds for Nexo is yet to be seen.


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended Content

Editors’ Picks

Cardano Price Forecast: ADA profit-taking and dormant wallet activity rise as BTC dips below $100K

Cardano Price Forecast: ADA profit-taking and dormant wallet activity rise as BTC dips below $100K

Cardano (ADA) price hovers around $0.54 on Monday, after falling nearly 15% last week, as tensions in the Middle East escalated following the US attack on Iran. This double-digit correction triggered a wave of liquidation, wiping out a total of nearly $17 million in long positions last week.

Top 3 Price Prediction: Bitcoin, Ethereum, Ripple – Bears set sight on $98K BTC, $2K ETH and $1.77 XRP

Top 3 Price Prediction: Bitcoin, Ethereum, Ripple – Bears set sight on $98K BTC, $2K ETH and $1.77 XRP

Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) declined by nearly 5%, 13%, and 7%, respectively, last week as tensions in the Middle East escalated. BTC is nearly at its key support level of around $100,000; a close below this level would trigger further correction.

Top Crypto Gainers Price Prediction: OKB, IP, HYPE post gains, shrug off Bitcoin’s dip to $100,000

Top Crypto Gainers Price Prediction: OKB, IP, HYPE post gains, shrug off Bitcoin’s dip to $100,000

The broader cryptocurrency market experiences a surge in selling pressure as Bitcoin (BTC) dips close to $100,000 at press time on Monday. Against this backdrop, the majority of top altcoins trade in the red while OKB (OKB), Story (IP), and Hyperliquid (HYPE) hold bullish momentum. 

Analysts slap over 90% chance of approval on altcoin ETFs including XRP and Litecoin following SEC's engagement

Analysts slap over 90% chance of approval on altcoin ETFs including XRP and Litecoin following SEC's engagement

Altcoin exchange-traded funds (ETFs) received a boost in approval odds on Friday from Bloomberg analysts James Seyffart and Eric Balchunas, with most of them now having a 90% chance of approval.

Bitcoin Weekly Forecast: The calm before the storm

Bitcoin Weekly Forecast: The calm before the storm

Bitcoin (BTC) price remains steady above a key support level, trading slightly above $106,000 at the time of writing on Friday. The uncertainty looms as geopolitical tensions between Iran and Israel show no sign yet of an exit strategy from either side.

The Best brokers to trade EUR/USD

The Best brokers to trade EUR/USD

SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.

BTC

ETH

XRP