Benzinga - On Dec 5, crypto lender Nexo announced that it would discontinue operations in the United States within the next few months. The company specifically mentioned that it would immediately cut off access to its "Earn Interest Product" in eight U.S. states and is no longer allowing new registrations for its Earn product.
Regulator Discussion Hits Dead End
According to Nexo's official announcement, the firm had already off-boarded Earn clients from New York and Vermont at the regulator's insistence. The announcement further states that,
"Our decision comes after more than 18 months of good-faith dialogue with US state and federal regulators which has come to a dead end"The firm also cites that, their Earn Interest Product will no longer be available from December 6, 2022, for existing clients in eight additional US states - Indiana, Kentucky, Maryland, Oklahoma, South Carolina, Wisconsin, California, and Washington.
Is The FTX Collapse To Blame?
As per Nexo, it faced a lot of grievances with the U.S. regulators, claiming that even though regulators initially encouraged their cooperation and a path towards sustainability did look viable -- the recent FTX saga has made it "impossible" for the company to continue operating."Given the challenges of the confusing and contradictory US regulatory regime, it is with a heavy heart that we begin the gradual and orderly departure from the US.", the announcement said.
Nexo's Troubled U.S. Tenure
Earlier, according to the California Department of Financial Protection and Innovation, Nexo's interest-earning accounts offered interest rates of up to 36% annually. Nexo later claimed that the 36% interest rate only applied to one asset and that the high rate was not advertised. Although the crypto lender did not provide a firm timeline for its overall withdrawal from the U.S., Nexo said it will continue to process customer withdrawals "in real-time" as it gradually shuts down its operations in the country.