NEW YORK – New York Attorney General Letitia James has joined with seven state securities regulators in suing cryptocurrency companies Nexo Inc. and Nexo Capital Inc. (Nexo), for failing to register with the state as securities and commodities brokers or dealers and for lying to investors about their registration status
Despite warnings from the Office of the Attorney General (OAG) to register as a securities and commodities broker or dealer, Nexo failed to register and misrepresented to investors that they are a licensed and registered platform, the attorney general said.
According to the AG, in New York, entities engaging in the offer, purchase, or sale of securities or commodities, including cryptocurrency platforms, must register with OAG if they are operating within the state or offering their products to New Yorkers. Through the lawsuit, James is seeking disgorgement of any revenues derived from Nexo’s unlawful conduct and restitution for investors.
“Cryptocurrency platforms are not exceptional; they must register to operate just like other investment platforms,” said James. “Nexo violated the law and investors’ trust by falsely claiming that it is a licensed and registered platform. Nexo must stop its unlawful operations and take necessary action to protect its investors.”
The Allegations
The lawsuit — filed in New York County State Supreme Court — alleges:
- Nexo promoted and sold securities in the form of an interest-bearing virtual currency account called the Earn Interest Product with promises of high returns for participating investors, while failing to register as a securities broker or dealer as required by state law.
- Nexo engaged in the unregistered purchase and sale of securities and commodities through its virtual currency trading platform called the Nexo Exchange, and misled investors by falsely representing that it was in compliance with applicable laws and regulations.
Roughly 10,000 New Yorkers have accounts with Nexo.
The Specifics
The AG’s office stated that the lawsuit specifically charges Nexo with violating New York’s Martin Act and New York Executive Law § 63(12). The suit seeks restitution for thousands of defrauded investors, disgorgement of revenues derived from Nexo’s unlawful conduct, and permanent injunctions against the defendants’ violations of state law.
According to the New York AG, the matter arises from an investigation conducted in coordination with a working group of state securities regulators in California, Kentucky, Maryland, Oklahoma, South Carolina, Washington, and Vermont, all of which have filed their own administrative actions against Nexo.
The Very Best in CU Reporting. For You. For Free. Or Your Money Back
Don’t forget to check your Spam/Junk email folder if you haven’t been receiving your free, popular and daily CUToday.info news headlines.
And if you haven’t yet signed up for the new email solution on which CUToday.info has partnered with ResponseGenius, you can do so here. Signing up requires less than one minute of your time.
CUToday.info has received very positive response from readers following the move to an improved provider of the daily headlines, but many also noted they did need to go to their Spam/Junk folder and mark it as safe.
The new email solution has not only improved every reader’s delivery experience, but it also features a fresh, new format that is easy to read, especially on mobile devices.
Please note and/or make your IT department or email administrator aware the emails will be coming from the domains CUTodayinfo.com and CUTodayinfoReply.com.