Facing a phalanx of regulators, cryptocurrency lending platform Nexo says it is "phasing out" the U.S. side of its operations.
In a statement announcing a "gradual" departure, Nexo cited a "dead end" in talks with U.S. regulators.
In particular, the firm noted a recent scramble from state regulators and the federal Consumer Financial Protection Bureau to investigate Nexo's "Earn" offering.
"This was made crystal clear by the Consumer Financial Protection Bureau’s (CFPB) decision this past Thursday insisting it has jurisdiction to investigate our Earn Interest Product, which the SEC and state regulators have simultaneously insisted is a security subject to their jurisdictions," the firm's announcement read. On Thursday, the CFPB rejected a petition from Nexo to cease an investigation into the product after the company argued that only securities regulators hold jurisdiction over it.
Still, Nexo said it wasn't happy with them either.
"In addition, a number of the very state securities regulators we had been cooperating with for several months blindsided us by filing actions against us without advance notice," the departure statement said.
The Earn product, like many crypto lending platforms, in theory replicates a bank account with higher rates of return. But the SEC has taken issue with similar products, including a $100 million fine against BlockFi that Nexo cited in its petition for the CFPB to drop an investigation. State regulators, who sometimes coordinate with federal authorities, also sent the company cease and desist letters in September.
Nexo, which has a large portion of its operations in Bulgaria, had announced that it would no longer pay interest on new Earn deposits from the U.S. earlier this year.
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