A California resident, John Kress, filed a lawsuit against the crypto-lending platform Nexo for damages arising from “fraudulent inducement” to take loans. The Block reports this.
According to the complaint, Kress held an interest-bearing account on the platform. He alleges that Nexo used “misleading statements” to induce him to borrow additional digital assets, which he had deposited into yield-generating products for extra earnings.
The plaintiff said that ultimately “as a result of liquidations of positions, he incurred losses of millions of dollars due to the misleading conduct”.
Kress described himself as a longtime crypto investor. He bought Bitcoin in 2014 and Ethereum in 2017. In 2021, the plaintiff invested assets in Nexo’s yield-bearing products.
He also cited regulatory actions against the company concerning the Earn Interest Product. SEC and state regulators in several states deemed the yield-bearing product an unregistered securities offering.
In January 2023, the company reached an agreement with the authorities, agreeing to pay fines totaling $45 million.
From 1 April Nexo will discontinue the Earn Interest Product offering to US investors.
The company rejected the allegations in the suit, calling them unfounded.
“Mr. Kress had previously contacted us about his account, but he himself stopped communicating. Therefore, we believe this complaint is filed in its own interests due to news about Nexo’s phased withdrawal from the U.S. market,” commented a spokesperson for the crypto-lending platform.
Earlier in January, the company faced outflows amid reports of raids at Bulgarian offices. They occurred as part of an investigation into potential Nexo involvement in money laundering.