Overview
- Nexo originated at least 5,456 consumer and commercial crypto-backed loans to California residents from July 2018 to November 2022 without a state lending license, the DFPI found.
- Investigators said Nexo did not assess borrowers’ credit history, debt, expenses or overall financial condition, while marketing “no credit checks” and relying on overcollateralization with liquidation at an 83.33% loan-to-value threshold.
- The settlement requires Nexo to transfer all California customer funds to Nexo Financial LLC, its licensed U.S. affiliate, within 150 days and to implement IP-based geoblocking to block access to unlicensed services.
- DFPI Commissioner KC Mohseni said lenders must follow consumer-protection laws that include ability-to-repay standards, emphasizing that crypto-backed loans are not exempt.
- The action adds to roughly $45 million in U.S. penalties Nexo paid in 2023 over unregistered products and arrives as the company has signaled plans to re-enter the U.S. market.