After a $45 million penalty last month, Nexo is closing access to its Earn Interest product to US users. The other customers of the platform are not impacted.
https://cryptoast.fr/nexo-end-product-earn-interest-users-americains/
Nexo reviews the policy of its Earn Interest product
After a $45 million penalty last month following disputes with the Securities and Exchange Commission (SEC), Nexo has announced the end of its Earn Interest product for US users.
This new feature will take effect on April 1st and those concerned are invited to take the necessary measures as soon as possible. This decision also applies to the credit service offered by Nexoif it is specified that American users will be notified in due time, they are nevertheless enjoined to repay their debts.
For all other Nexo customers, the application continues to offer all of its features. Moreover, it is indicated that if a user has been wrongly identified as a resident of the United States, he is invited to repeat the Know Your Customer (KYC) verification procedure, by contacting customer service.
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A certain lack of transparency
While the SEC goes on the offensive with cryptocurrency platformsand in particular concerning staking services, it is necessary to differentiate the latter from the case of Nexo.
And for good reason, the fact is that Nexo lacks transparency on how the promised interest is generated. Indeed, it is for example fundamentally impossible to offer 7% on Bitcoin (BTC) thanks to staking, and this is not presented as such:
Interest offered by Nexo on Bitcoin
Nexo thus offers similar, or even higher, interest on many cryptocurrencies. In addition, receiving said interest in NEXO tokens allows you to earn an additional return.
While the way in which this performance is generated is not formally identified at first glance, it’s a safe bet that client assets are converted and distributed across various lending products, so as to maximize returns. If so, it should be noted that such practices have led to bankruptcies like Celsius, despite Nexo touting over-collateralisation of its loans.
It is then a question of differentiating these products, which can effectively resemble financial securities, staking services whose operation is totally different. Although the White House has called for more regulation at the start of the year, it will be necessary to differentiate the legitimate interventions of the SEC from those which seem less so.
👉 Also in the news – Coinbase is ready to defend the legitimacy of its staking services in court
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Source: Nexo
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I timidly discovered the world of blockchain at the end of 2018 during my quest for financial freedom. Initially invested moderately, it was only two years later that I took the gamble of betting everything on the movement that was taking shape then. I then dedicate 2021 to training myself better to acquire more knowledge and seriousness. As I often like to say: I still have a billion things to learn. And what I do know, I want to share with you.
Vincent Mayor
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