According to a ChainCatcher report citing Cointelegraph, the cryptocurrency lending company Nexo Capital will pay a $500,000 fine to the California Department of Financial Protection and Innovation. The regulator accused the company of issuing thousands of loans to California residents without holding a valid license and failing to properly assess borrowers' repayment capacity. The regulator stated that between July 2018 and November 2022, Nexo issued at least 5,456 consumer and business loans to California residents without holding a valid lending license. Typically, the company did not evaluate the financial status of borrowers, including their repayment capacity, existing debts, or credit history, before issuing loans. Nexo must transfer all funds from California customers to its U.S.-based affiliated entity, Nexo Financial LLC, which holds a California lending license, within 150 days.
Nexo Fined $500,000 by California Regulators for High-Risk Lending
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Summary
Nexo Capital has agreed to pay a $500,000 fine to California's Department of Financial Protection and Innovation. Regulators alleged that the cryptocurrency lender issued thousands of unlicensed loans to residents, violating CFT (Countering the Financing of Terrorism) safeguards. Between 2018 and 2022, Nexo issued at least 5,456 loans without assessing borrowers' repayment capacity or credit history. The company must transfer all California customer funds to its licensed U.S. affiliate within 150 days, which will impact liquidity and the cryptocurrency market.
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