New York Attorney General Letitia James has sued Nexo, a large digital asset platform. James is joining 7 other states in pursuing the crypto firm.
New Y0rk is being joined in the action by the following states: California, Kentucky, Maryland, Oklahoma, South Carolina, Washington, and Vermont.
The New York AG is suing Nexo for allegedly failing to register with the state as securities and commodities brokers or dealers and for lying to investors about their registration status.
The AG’s office states that in New York, entities engaging in the offer, purchase, or sale of securities or commodities, including crypto platforms, must register with OAG if they are operating within the state or offering their products to New Yorkers.
AG James said that crypto platforms are “not exceptional” and must be registered like any other investment platform:
“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.”
The AG’s lawsuit alleges that Nexo promoted and sold securities in the form of an interest-bearing virtual currency account called the Earn Interest Product with promises of high returns for participating investors, while failing to register as a securities broker or dealer as required by state law.
Additionally, the lawsuit alleges that Nexo engaged in the unregistered purchase and sale of securities and commodities through its virtual currency trading platform called the Nexo Exchange. The AG claims that approximately 10,000 New Yorkers have accounts with Nexo.
The lawsuit seeks restitution for investors, disgorgement of revenues derived from Nexo’s conduct, and permanent injunctions against the defendants’ violations of state law.
The lawsuit is being described as the AG’s ongoing pursuit of crypto scofflaws, like BlockFi.
In October 2021, AG James directed unregistered crypto lending platforms to cease operations for not fulfilling their legal obligations.
The New York AG’s complaint is available here.