Crypto lender Nexo has issued a statement regarding the enforcement actions it’s facing from eight different states pertaining to its Earn Interest Product (EIP).
Earlier this week, state regulators in California, New York, Washington, Kentucky, Vermont, South Carolina, Maryland and Oklahoma made allegations that Nexo was violating securities laws with EIP.
In a new blog post, Nexo says it has always aimed to be a sustainable and compliant business.
“We have been working with US federal and state regulators and understand their urge, given the current market turmoil and bankruptcies of companies offering similar products, to fulfill their mandates of investor protection by examining past behavior of providers of earn interest products.”
The firm says it no longer accommodates new US accounts and balances for EIP since the U.S. Securities and Exchange Commission (SEC) made its stance on crypto lending platforms’ interest-bearing accounts.
“Since the SEC guidance on earn products, dubbed ‘The BlockFi Order’ in February 2022, Nexo has voluntarily ceased the onboarding of new US clients for our Earn Interest Product as well as stopped the product for new balances for existing clients.”
The firm also responds to criticisms that it may be offering unrealistically high interest rates for its clients. Nexo clarifies that it only offers 36% interest on Axie Infinity (AXS), which currently has a 60% staking reward, but gives lower, single-digit interest for almost all the others.
“Our rates for the overwhelming majority of the assets are in the single-digit percentages. When it comes to the most popular assets, including Bitcoin, Ethereum, and stablecoins, we offer balance limits, where customers earn a lower yield above certain amounts.
Our rates are always determined with the underlying sustainability of our business and security of customer assets in mind. An overview of the latest changes to our Earn Interest Product is available here where it is shown that interest rates for Bitcoin, for example, are nominal and vary between 1.5% and 7%.
We do pay interest rates as high as 36% for one asset only, Axie Infinity’s AXS where the current staking reward is nearly 60%. This rate, however, is an exception, and we do not advertise the percentage in our marketing materials.”
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