Nexo ‘surprised’ by state regulators' actions, says co-founder
Kalin Metodiev, the co-founder and managing partner of crypto lender Nexo stated his firm was “surprised” by the way in which eight state regulators publicly took action against it for securities violations.
Earlier this week the California Department of Financial Protection & Innovation (DFPI) filed a desist and refrain order against Nexo’s Earn Interest Product, claiming the company was offering a security product that had not been cleared by the government for sale in the form of an investment contract.
The DFPI also stated that it was joining regulators from seven other states in taking action against the company, including Kentucky, New York, Maryland, Oklahoma, South Carolina, Washington and Vermont.
Speaking with Cointelegraph at Token2049, Metodiev explained that Nexo was caught off guard with the latest regulatory push back, as it has been “trying to be responsible” by engaging in direct conversations with the regulators such as the Securities and Exchange Commision (SEC) for quite some time.
“We were a little surprised by this news being thrown out there in public, you know, because this isn't a process that just started this week,” he said, adding that:
Metodiev said Nexo also communicated to the SEC earlier this year that it was “voluntarily” discontinuing services for new U.S. customers, suggesting the firm was working in good faith and aiming to be compliant with local regulations.
The product has not been available to new users in the United States since Feb. 19, and existing U.S. account holders were unable to make new deposits into their accounts.
“The event that made us make the decision was actually the SEC ruling against BlockFi in February. The moment we saw that we established contact with the SEC, and
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