The two business units of popular cryptocurrency lending platform Nexo based in the United Kingdom are being dissolved amid regulatory issues in other parts of Europe and North America. However, Nexo will continue operating within the country despite the restructuring effort.
- According to filings from this month, Nexo has applied to remove Nexo Financial Services Ltd. and Nexo Clearing and Custody Ltd from the UK companies register, as reported by BNN Bloomberg.
- Nexo co-founder Antoni Trenchev stated in messages to Bloomberg that the company is «doing some restructuring» and «rethinking the way we go about servicing clients.»
- Apart from crypto trading and custody, Nexo provides several crypto-based financial products to its clients, such as debit card services, borrowing, and savings accounts. Its website claims that these savings accounts can offer «up to 15% APR on your crypto,» with yields reaching as high as 7% for Bitcoin and 12% for USDC.
- Regulators in the United States have expressed strong skepticism about crypto-based interest-bearing accounts, criticizing them for their unusually high savings rates compared to traditional savings accounts, and since crypto financial platforms are not covered by federal deposit insurance unlike chartered banks.
- Several crypto lending platforms, including Celsius, Voyager, and later BlockFi, went bankrupt, causing increased scrutiny from mid-2022 onwards. Nexo emphasized that it was not in the same financial condition as these businesses but is still facing ongoing waves of scrutiny and charges from the Securities and Exchange Commission over the next months.
- In December, Nexo announced that it was leaving the United States due to regulatory difficulties, and its Earn product remains inaccessible in Canada, where regulators have prohibited crypto margin trading completely.
- Nexo’s offices in Bulgaria were raided in January amid accusations of money laundering, tax fraud, and computer fraud, while conducting unlicensed banking services. Trenchev described these accusations as «ludicrous,» and the company sued Bulgaria for $1 million in response.