Nexo says it does not offer high interest rates
Important takeaways
- Nexo has defended itself against charges issued by various state regulators in the US yesterday.
- Regulators say Nexo offered interest rates as high as 36% without informing customers of the risks.
- Nexo says the promised interest rates are usually in the single digits and not as high as regulators claim.
Share this article
Nexo has defended itself against various US regulators by claiming that it promises modest interest rates.
Nexo says it offers nominal prices
Nexo says it does not offer high interest rates.
In a statement, the company said interest rates on “the overwhelming majority” of its backed cryptoassets are “in the single-digit percentages.”
It added that these rates have been chosen with “the underlying sustainability of our business and the security of client assets in mind”, suggesting it aims to offer low-risk products.
Nexo noted that it only promises interest rates as high as 36% for one asset – Axie Infinity’s AXS token. In fact, the stake reward for that asset is currently close to 60%.
It insists that such a high rate is an “exception” and that it does not advertise this rate in marketing materials.
In contrast, the company’s interest rate for Bitcoin is “nominal” and usually between 1.5% and 7%.
Nexo’s advertised interest rates are at the center of various states’ accusations against the firm. Regulators in California, for example, cited Nexo’s “significantly higher” rates of return to suggest the firm was offering securities without fully informing clients of the risks.
The question of whether Nexo serves US citizens is also under discussion. Today, the firm said it is no longer bringing new US customers to its Earn Interest product following actions against BlockFi in February. It also said it was “discontinuing the product for new balances for existing customers.”
State regulators nevertheless claimed yesterday that 93,000 US residents have $800 million in Nexo accounts.
The rest of Nexo’s update is identical to statements seen yesterday. In response to various cease-and-desist orders, Nexo insisted it is working with regulators and sought to differentiate itself from its competitors.
Disclosure: At the time of writing, the author of this piece owned BTC, ETH and other cryptocurrencies.
