During an Ask Me Anything session, the co-founders of Nexo attempted to reassure users that the site is working with authorities to address the concerns.
On October 4, the co-founders of Nexo, Antoni Trenchev and Kalin Metodiev presented an AMA in which they addressed recent stop-and-desist orders issued by a number of U.S. state authorities.
Given the volatility of the last several months, the duo also raised concerns about the platform’s stability, assuring users that bankruptcy is not “Nexo’s reality.”
Several U.S. state agencies initiated legal action against Nexo’s Earn Interest Products at the end of September.
The Department of Financial Protection and Innovation (DFPI) of California has said that their investigations follow similar steps taken against BlockFi, Voyager Digital, and Celsius. The last two parties have declared bankruptcy.
Commissioner of the California Department of Financial Institutions Clothilde Hewlett said that Nexo’s earn products are unregistered securities, and she intends to safeguard Californians from the danger associated with such offers.
In response to an AMA question about how this would affect Nexo, Trenchev noted that the business has initiated discussions with the relevant federal and state agencies.
However, since each entity has its own processes, timetables, and internal dynamics, the route ahead is not straightforward.
Notwithstanding, Trenchev noted that Nexo has always met with legal regulations, such as reducing its earn offers so that current customers cannot join additional funds until regulatory clarification is provided.
Trenchev was shocked by the issuing of stop-and-desist orders since the company had been helpful and transparent with authorities before the announcements.
One might form his or her own opinion as to why they deemed this action important. In any event, Trenchev said that, in his perspective, authorities want crypto to generate revenue and have no plans to shut it down. However, the aftermath of the previous CeFi bankruptcy has prompted them to exercise extreme caution.
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