The cryptocurrency-lending platform Nexo challenged in court the Cayman Islands Monetary Authority’s rejection of its license application to operate with virtual assets. The Block reports this.
The regulator cited the mismatch between the company’s business model and the required risk profile as the reason for the rejection.
“Nexo posed a risk to market confidence, consumer protection and the Cayman Islands’ reputation as a financial centre,” the statement said.
The regulator noted the lack of disclosure of information about potential violations of regulatory requirements in the US and proceedings in the UK.
Nexo’s representatives said the regulator’s decision was ‘procedurally unfair’ — it breaches constitutional and statutory duties by failing to justify the reason.
Lawyers stressed that the platform had taken the regulator’s concerns into account during the application process. They added that the lawsuit against the firm and its former employee regarding an account on the crypto-derivatives exchange was filed by BitMEX.
The platform intends in court to overturn the regulator’s decision and obtain the corresponding licence.
In January Bulgarian authorities conducted searches at Nexo’s local office as part of an investigation into potential AML-policy. The platform plans to seek compensation for the damages through the courts.
In December Nexo announced a “gradual winding down” of operations in the United States due to regulatory pressure.
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