California Fines Crypto Asset Manager Nexo $500,000 for Operating Unlicensed Lending

**Nexo Fined $500k by California’s DFPI for Unlicensed Crypto-Backed Loans** California’s Department of Financial Protection and Innovation (DFPI) announced Jan. 16 that it has levied a $500,000 fine against cryptocurrency asset management platform Nexo for offering crypto-backed loans to at least 5,456 California residents without a state-issued license. An investigation found Nexo Capital Inc.—the platform’s Cayman Islands-registered subsidiary—issued loans to consumers and businesses between July 2018 and November 2022 without valid authorization. The firm failed to assess borrowers’ repayment ability, existing debt, or credit history before lending, violating California’s financial regulations, the regulator said. DFPI Commissioner KC Mohseni noted: “Lenders must follow the law and avoid issuing high-risk loans that put consumers in danger—crypto-backed loans are no exception.” Beyond the fine, Nexo has 150 days to transfer all California user funds to a licensed U.S.-affiliated entity. The penalty comes as Nexo aims to re-enter the U.S. market. The company exited the U.S. in 2022 amid state and federal regulatory pressure. In 2023, Nexo settled for a total of $45 million with the U.S. Securities and Exchange Commission (SEC) and multiple state regulators over unregistered crypto lending and yield products. Analysts say the case underscores U.S. regulators’ ongoing high-pressure stance on crypto lending compliance, particularly around consumer protection and lending reviews. Nexo has not yet publicly responded to the fine.