Crypto broker Nexo gets sued for illegally operating in New York

September 26, 2022 Rob Abruzzese

New York Attorney General Letitia James. AP Photo/Brittainy Newman)

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One cryptocurrency platform thought the rules didn’t apply to it and now it’s being sued by New York State Attorney General Letitia James.

James is alleging that Nexo Inc, and Nexo Capital Inc., have not registered with the state as securities and commodities brokers or dealers, and have lied to investors about their registration status.

James explained that her office gave Nexo a warning prior to filing the suit that any entity in New York that engages in the offer, purchase, or sale of securities or commodities, including cryptocurrency, that they must register with the Office of the Attorney General.

“Cryptocurrency platforms are not exceptional; they must register to operate just like other investment platforms,” said Attorney General James. “Nexo violated the law and investors’ trust by falsely claiming that it is a licensed and registered platform. Nexo must stop its unlawful operations and take necessary action to protect its investors.”

James said that roughly 10,000 New Yorkers have accounts with Nexo, which will be charged with violating the Martin Act and Executive Law Section 63(12). The attorney general is seeking restitution for thousands of defrauded investors, disgorgement of revenues derived from the company’s unlawful conduct, and permanent injunctions against Nexo as well.

The attorney general has been focused on the crypto industry, especially since markets reached notable lows in June 2022. That month she warned New Yorkers of some of the dangers and noted that she created a page on the Attorney General’s website to file complaints. This was after, in October 2021, she ordered unregistered crypto platforms, including Nexo, to cease operations in the state. In June 2022, James reached a settlement for nearly $1 million with the crypto platform BlockFi Lending LLC for selling unregistered securities.