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AG James Sues Crypto Companies Over Alleged Failure to Register and Misrepresentations

  • New York AG Letitia James sued Cayman Islands-based cryptocurrency companies Nexo Inc. and Nexo Capital, Inc. (collectively, “Nexo”), alleging that Nexo violated New York’s Martin Act and Executive Law by failing to register with the state as securities and commodities brokers or dealers and for misrepresenting its registration status to investors.
  • As alleged in the complaint, Nexo owned and operated a website and mobile application offering users transactions with virtual investment products, yet it failed to register with the state or AG’s office as a securities broker or commodities broker-dealer as required by law. Nexo is also alleged to have made misleading statements that the site was offering low-risk investments, and that Nexo was fully licensed and operating in compliance with applicable law.
  • The complaint seeks disgorgement of revenues obtained in connection with the alleged violations, restitution of money received from investors, a permanent injunction against further violations, attorneys’ fees and costs and other relief.
  • Securities regulators in California, Kentucky, Maryland, Oklahoma, South Carolina, and Washington also simultaneously filed administrative actions against Nexo relating to the same conduct, the product of a working group of state securities regulators focused on interest-bearing cryptocurrency accounts.