Nexo fined $500K for unlicensed crypto loans in California

Nexo Capital will pay a $500,000 fine to California for issuing 5,456 unlicensed crypto-backed loans, adding to previous regulatory settlements and highlighting compliance issues.

Nexo Capital has agreed to pay a $500,000 fine to California’s Department of Financial Protection and Innovation (DFPI) after issuing 5,456 unlicensed consumer and commercial crypto-backed loans to state residents between July 2018 and November 2022. The DFPI found that Nexo operated without the required lending license and failed to properly assess borrowers’ ability to repay, existing debt, and credit history, violating California’s consumer protection laws. As part of the settlement, Nexo must transfer all California resident funds to a licensed U.S. affiliate within 150 days. This penalty follows previous settlements, including a $45 million agreement with the SEC and state regulators in 2023 over similar compliance breaches. Nexo has since ceased traditional crypto lending products for U.S. customers, maintaining only crypto-backed borrowing services abroad. The case highlights growing regulatory scrutiny on crypto lending platforms and the importance of compliance.