Nexo sues Cayman Islands financial regulator over VASP license

Published at: Jan. 16, 2023

The same week that Bulgarian authorities were raiding Nexo’s offices and indicting four individuals for charges related to money laundering, the crypto lender filed suit in the Cayman Islands.

In a document dated Jan. 12, Nexo filed a lawsuit against the Cayman Islands Monetary Authority, or CIMA, for denying its registration as a virtual asset service provider (VASP) in the island nation. The crypto lender asked the court to overturn the financial regulator’s decision as it was “suitable” to provide crypto services to Cayman Islands residents.

According to court documents, Nexo applied to CIMA in January 2021, providing additional information at the request of the regulator. However, the monetary authority asked for clarification on the application in October 2022, citing “certain legal and regulatory matters as noted in the news media” which Nexo had not disclosed, and later rejected the application in December 2022.

“The Authority breached its constitutional and statutory duty to provide comprehensible, satisfactory and sufficiently detailed reasons for its Refusal Decision,” alleged Nexo.

Related: Nexo investigation is not political, Bulgarian prosecutors say

Nexo claimed that CIMA had placed “too much weight” on regulators posing enforcement actions on the crypto lender, citing incidents in United Kingdom courts. State-level regulators in the United States also filed cease and desist orders against Nexo in 2022:

“[Nexo] had diligently cooperated with all US states and federal regulatory inquiries and has been proactive in maintaining dialogue with the respective regulators [...] There have been some regulatory ambiguities with respect to the laws and regulations applicable to digital assets in the US such that the fact of the regulatory enforcement itself does not connote any improper behaviour.”

The lending firm announced in December that it planned to gradually cease operations in the United States “over the coming months,” citing a lack of regulatory clarity.

Tags
Regulation
Lending
Caribbean
Nexo
Related Posts
Troubled crypto lender Vauld gets extended creditor protection
Embattled crypto lending platform Vauld one more time gets the period of creditor protection from a Singapore court. The company should come up with a revival plan before Feb. 28. As reported by Bloomberg on Jan. 17, Vauld has been granted more than a month to close its negotiations with one of two digital-asset fund managers to take over the executive control of the tokens stuck on its platform. Apparently, the Singapore high court was satisfied by the company’s claim that the negotiations have entered to the “advanced stage.” In July 2022 the platform halted the withdrawals for its 800,000 …
Regulation / Jan. 17, 2023
Nexo agrees to $45M settlement with SEC and NASAA over earn product
Crypto lender Nexo Capital has agreed to pay $45 million in penalties to the United States Securities Exchange Commission (SEC) and The North American Securities Administrators Association (NASAA) for allegedly failing to register the offer and sale of its Earn Interest Product (EIP). The news was announced by the SEC and NASAA in two separate statements on Jan. 19. According to a statement from the SEC, Nexo agreed to pay a $22.5 million penalty and cease its unregistered offer and sale of the EIP to U.S. investors. The additional $22.5 million will be paid in fines to settle similar charges …
Blockchain / Jan. 19, 2023
Congress weighs crypto payments and fintech lending in hearing today
In a hearing on Tuesday, the Congressional Fintech Task Force heard arguments on new rules that would potentially expand banking regulations to accommodate more technology firms providing financial services. A subunit of the Financial Services Committee, the Fintech Task Force leads the committee’s examinations of emerging technologies. As Task Force Chair Stephen Lynch (D-MA) noted, “Banking is becoming less centralized. Consumers are facing more choices than they ever have.” Banking the unbanked? Much of the back-and-forth in today’s hearing was as to whether or not loosening the rules of banking — which would allow more firms to, for example, offer …
Regulation / Sept. 29, 2020
Celsius judge says court may look to UK consultation paper in absence of US guidance
The lack of crypto regulation in the United States has long complicating the lives of users and service providers, and now a judge has acknowledged the pain the judiciary feels from its absence too. Chief United States Bankruptcy Judge Martin Glenn, the judge who is leading the Celsius case, said the court will look abroad for guidance in the case. Glenn wrote in an Oct. 17 filing in the Celsius case that: “Many, or pe[r]haps most, cases involving cryptocurrency may raise legal issues for which there are no controlling legal precedents in this Circuit or elsewhere in the United States …
Regulation / Oct. 17, 2022
FTX liquidators report exchange held $2.4M 'fleet of vehicles' in the Bahamas
The joint provisional liquidators of FTX Digital Markets — the firm’s subsidiary in the Bahamas — has released a report on the company’s physical assets in the island nation. According to affidavit filed by a PricewaterhouseCoopers partner with the Bahamas’ supreme court on Feb. 8, FTX’s joint provisional liquidators, or JPLs, said the company had purchased 52 properties in the Bahamas, including units “in the name of individual employees or relatives of SBF, despite FTX Digital providing the funding”. These properties, which included housing for FTX employees and commercial office space, were worth roughly $255 million and purchased by an …
Regulation / Feb. 10, 2023