According to Mike Dalton (CryptoBriefing), eight U.S. state regulators issued cease and desist orders or similar charges against the crypto lender NEXO:
The allegations concern Nexo’s Earn Interest Product, an interest-bearing account that promises up to 36% returns. The regulators are arguing that its Earn Interest Product constituted unregistered securities and that the company failed to provide adequate disclosures to customers.
This probably means that NEXO's Earn Interest Product will have to cease in these eight states, which is only a problem for the people living there.
However, there might be a bigger issue. As per a document from Kentucky state, NEXO would own 95% of their own NEXO tokens:
This situation seems to be quite similar to Celsius previous situation just before bankruptcy:
- Most of NEXO's assets consist of their own NEXO token,
- And NEXO owns 95% of the total supply of this token...
It means that the token has almost no real value, since it is nearly completely owned by NEXO. If they need USD cash, they will need to sell and dump it, which could lead to a sudden drop of token price and hence NEXO reserves (consisting mostly of NEXO tokens) and likely to the bankruptcy of NEXO.
Disclaimer: this article does not contain any financial advice. The information is provided for general informational and educational purposes only.
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