California Slaps Nexo With $500K Fine Over Unlicensed Crypto Lending Operations
Regulators just dropped the hammer—again.
When 'Move Fast and Break Things' Meets State Law
California's financial watchdog has levied a hefty $500,000 penalty against crypto lending platform Nexo. The charge? Operating without the proper lending license. It's the latest chapter in the ongoing tug-of-war between innovative fintech models and established regulatory frameworks designed for a pre-blockchain world.
The Compliance Price Tag
The fine underscores a brutal reality for crypto-native businesses: scaling quickly often means stepping on regulatory landmines. The half-million-dollar hit isn't just a line-item expense; it's a stark reminder that operating in the financial wild west still requires paying tribute to the local sheriffs. It's the cost of doing business while trying to rewrite the rules.
A Pattern, Not an Anomaly
This isn't a one-off. Nexo's California citation fits a familiar pattern of crypto firms facing enforcement actions for offering yield-bearing products that regulators classify as securities or unregistered loans. Each fine serves as a case study, slowly mapping the boundaries of the permissible in digital asset finance.
So, another day, another seven-figure lesson in compliance—just add it to the cost of revolutionizing finance, right after the cloud hosting bill and before the legal retainer. The innovation train keeps rolling, but the ticket just got $500,000 more expensive.
California Orders Nexo to Move Customer Funds After Lending Fine
“Lenders must follow the law and avoid making risky loans that endanger consumers — and crypto-backed loans are no exception,” DFPI Commissioner KC Mohseni said in a statement announcing the penalty.
In addition to the fine, Nexo has been ordered to transfer all funds belonging to California residents to a licensed U.S. affiliate within 150 days.
According to the DFPI, the conduct occurred between July 2018 and November 2022, a period during which Nexo expanded its crypto-backed lending business before exiting the US market amid mounting pressure from state and federal regulators.
Since withdrawing, the company has shuttered its traditional lending products for US customers, continuing crypto-backed borrowing services only outside the country.
The latest penalty marks another clash between Nexo and California authorities. In 2023, the DFPI co-led a multistate task force that reached a $22.5 million settlement with the company over its unregistered Earn Interest Product.
The DFPI continues to hold companies accountable for breaking the law.
Nexo Capital Inc. (Nexo) must pay $500,000 for breaking California financial laws, including offering crypto-backed loans and services without a valid license.
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That same year, the US Securities and Exchange Commission charged Nexo with failing to register its crypto lending offerings, imposing an additional $22.5 million penalty and bringing the firm’s total US fines in 2023 to $45 million.
Industry observers say the findings raise broader questions about compliance standards in crypto lending.
Despite the regulatory setbacks, Nexo has continued to pursue international expansion and high-profile marketing efforts, including a multi-year sponsorship deal with the Australian Open.
Nexo Signals US Comeback at Event Featuring Donald Trump Jr.
In April last year, Nexo also revealed plans to reenter the U.S. market, marking a significant comeback.
The announcement came during a high-profile event in Sofia, Bulgaria, on Sunday, where Donald TRUMP Jr. was the featured speaker.
The conference, titled “Trump Business Vision 2025” and hosted by Nexo, brought together leaders from finance and technology to discuss global market trends.
The company’s decision to return coincides with a notable shift in Washington’s stance toward digital assets under President Trump’s administration.
Since taking office, President Trump has championed a more crypto-friendly regulatory environment, pausing SEC lawsuits against crypto firms and easing banking guidelines related to digital assets.
The Trump family itself is expanding its footprint in the crypto space through World Liberty Financial, where Trump Jr. serves as an ambassador.
Describing a “tectonic shift” in US crypto policy, Trenchev emphasized that real progress is underway to position America as a hub for digital finance.
