Nexo said that it is too hard to follow the “inconsistent and changing positions” of US regulators.
Nexo has given up on continuing to do business in the United States because of pressure from regulators.
On Monday, the company said it would start pulling its products and services out of the country over the next few months.
Nexo says that the company has been talking with state and federal regulators in the US in “good faith” for the past 18 months. Even so, Nexo no longer thinks that these groups can be negotiated with because they have “changing and inconsistent positions” on legal issues.
“The US won’t give a way for blockchain businesses to move forward, and we can’t assure our customers that regulators are looking out for their best interests,” the company said.
Nexo has been hassled by both state and federal regulators over its crypto lending service, especially its “earn” product, which lets depositors earn a steady annual return on their crypto savings. California’s government has already told the company to stop selling the product because it is not registered as a security.
Nexo has dropped clients from New York and Vermont over the past two years because of pressures that are similar to those in other states. On Tuesday, December 6, its Earn product will be taken away from another eight states, including Indiana, Kentucky, Maryland, Oklahoma, South Carolina, Wisconsin, California, and Washington.
In the short term, other Nexo products will still be available, and the company will keep taking withdrawals from customers.
The company listed a number of things it has already done to show that it is in line with securities regulators. For example, it has registered its Nexo token with the Securities and Exchange Commission (SEC) and taken XRP off the stock market. Both steps have to do with the SEC’s insistence that most cryptocurrencies that aren’t Bitcoin are securities.
“At first, regulators encouraged us to work with them, and it seemed like there was a good way forward, but what has happened in the past few weeks and months and how regulators have acted since then show the opposite,” the company wrote.
The SEC has been wary of all crypto lending platforms, especially because their rates of return are much higher than those of traditional savings accounts. Last year, the agency made it so that Coinbase couldn’t offer a similar product with similar returns. At the time, Coinbase CEO Brian Armstrong criticized the SEC in a similar way, saying that their rules for what makes something a “security” were not clear.
In February 2022, BlockFi was fined $100 million for its yield product. After that, Nexo stopped taking customer money for its Earn product right away.
Nexo is now one of the last big lending companies still around after the bear market this year. Companies like Celsius, Voyager, FTX, and BlockFi have all gone bankrupt, and Genesis Trading could be next.