Nexo – a popular cryptocurrency lending platform – is dissolving two business units based in the United Kingdom while it deals with regulatory issues in other parts of Europe and North America.
The latest steps are part of a “restructuring” effort that will still involve Nexo continuing operations within the country.
- As reported by BNN Bloomberg, filings from this month show that the lender has applied to remove both Nexo Financial Services Ltd. and Nexo Clearing and Custody Ltd from the UK companies register.
- In messages to Bloomberg, Nexo co-founder Antoni Trenchev explained that his company was “doing some restructuring” and “rethinking the way we go about servicing clients.”
- Besides crypto trading and custody, Nexo offers a number of crypto-based financial products to its clients, including debit card services, borrowing, and savings accounts. These savings accounts can offer “up to 15% APR on your crypto,” according to its website, with yields sometimes rising as high as 7% for Bitcoin, and 12% for USDC.
- Regulators in the United States have shown strong skepticism of crypto-based interest-bearing accounts, criticizing them for their unusually high savings rates compared to traditional savings accounts. Unlike chartered banks, crypto financial platforms are not covered by federal deposit insurance.
- Scrutiny increased in mid-2022 after billions of dollars were lost within multiple now-bankrupt crypto lending platforms including Celsius and Voyager, and later BlockFi.
- Nexo emphasized that it was not in the same perilous financial condition as such firms, but nevertheless faced ongoing waves of scrutiny and charges from the Securities and Exchange Commission over the coming months. In December, Nexo announced that it was leaving the United States due to regulatory difficulties.
- Nexo’s Earn product is also inaccessible in Canada, where regulators have entirely banned crypto margin trading.
- The firm’s troubles extend to Bulgaria as well, where its offices were raided in January on accusations of money laundering, tax fraud, and computer fraud, while conducting unlicensed banking services.
- Trenchev described the accusations as “ludicrous,” and his company sued Bulgaria for $1 million in response.