Nexo, a platform for lending cryptocurrency, says it is “phasing out” its U.S. operations because it has to deal with a lot of regulators.
In a statement announcing a “gradual” departure, Nexo cited a “dead end” in talks with U.S. regulators.
In particular, the company said that state regulators and the federal Consumer Financial Protection Bureau were rushing to look into Nexo’s “Earn” service.
“This was made crystal clear by the Consumer Financial Protection Bureau’s (CFPB) decision this past Thursday insisting it has jurisdiction to investigate our Earn Interest Product, which the SEC and state regulators have simultaneously insisted is a security subject to their jurisdictions,” the firm’s announcement read. On Thursday, the CFPB rejected a petition from Nexo to cease an investigation into the product after the company argued that only securities regulators hold jurisdiction over it.
Nexo still said it wasn’t happy with them.
“Also, some of the state securities regulators we had been working with for a few months surprised us by taking legal action against us without telling us ahead of time,” the statement said.
The Earn product, like many crypto lending platforms, in theory replicates a bank account with higher rates of return. But the SEC has had problems with similar products, such as a $100 million fine against BlockFi, which Nexo used to ask the CFPB to stop looking into it. In September, the company also got letters from state regulators, who sometimes work together with federal ones.
Nexo does a lot of its business in Bulgaria. Earlier this year, it said that it would no longer pay interest on new Earn deposits from the U.S.
The firm is the last major crypto lending platform functioning, as competitors like BlockFi, Celsius and Voyager have filed for bankruptcy protection.