Nexo, a prominent cryptocurrency lending platform, has decided to dissolve two of its business units based in the United Kingdom as it grapples with regulatory challenges in various parts of Europe and North America. This move is part of a broader restructuring effort, although Nexo will continue its operations within the country.
According to filings reported by BNN Bloomberg, Nexo has applied to remove Nexo Financial Services Ltd. and Nexo Clearing and Custody Ltd. from the UK company register. In a message to Bloomberg, Antoni Trenchev, co-founder of Nexo, explained that the company is undergoing restructuring and reevaluating its approach to client services.
Aside from crypto trading and custody, Nexo offers a range of crypto-based financial products, including debit card services, borrowing, and savings accounts. The savings accounts, as advertised on their website, can yield “up to 15% APR on your crypto,” with Bitcoin reaching as high as 7% and USDC up to 12%.
Regulators in the United States have expressed skepticism towards crypto-based interest-bearing accounts, highlighting their unusually high savings rates compared to traditional accounts. Unlike chartered banks, crypto financial platforms are not covered by federal deposit insurance. Scrutiny heightened in mid-2022 after several crypto lending platforms, including Celsius, Voyager, and later BlockFi, encountered financial difficulties.
Nexo clarified that it is not facing the same dire financial situation as those firms. However, it continues to face ongoing scrutiny and charges from the Securities and Exchange Commission in the coming months. In December, Nexo announced its departure from the United States due to regulatory obstacles.
Furthermore, Nexo’s Earn product is currently inaccessible in Canada due to the complete ban on crypto margin trading imposed by regulators in the country. The company’s troubles also extend to Bulgaria, where its offices were raided in January on allegations of money laundering, tax fraud, and computer fraud related to unlicensed banking services.
Trenchev dismissed these accusations as “ludicrous” and responded by filing a $1 million lawsuit against Bulgaria.
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