Nexo Hit With $500,000 Penalty as California Cracks Down on Crypto Lending

TLDR

• California fined Nexo $500K for issuing thousands of unlicensed crypto-backed loans
• Regulators cited failures in credit checks and repayment assessments from 2018–2022
• Nexo must move California customer funds to a licensed U.S. affiliate within 150 days
• The penalty adds to $45M in prior U.S. settlements over unregistered crypto products
• Despite setbacks, Nexo plans a regulated U.S. return amid tighter lending oversight

Nexo faces renewed regulatory scrutiny after California imposed a $500,000 penalty for issuing unlicensed crypto-backed loans to state residents. The enforcement action targets 5,456 loans and adds pressure on the company’s planned return to the United States. The case now reshapes the wider debate on crypto lending compliance as regulators tighten oversight.

California Imposes New Compliance Demands on Nexo

California regulators imposed the fine after determining that Nexo issued consumer and commercial loans without a valid lending license. The agency said the company failed to review credit histories or assess repayment capacity across thousands of deals. Regulators ordered Nexo to transfer all California customer funds to a licensed U.S. affiliate within 150 days.

The findings cover activity between 2018 and 2022 when Nexo expanded its crypto-backed lending operations across multiple markets. Oversight increased as state officials examined underwriting practices and risk management gaps. The investigation concluded that missing safeguards created higher default exposure during market volatility.

Crypto-backed loans allow users to secure funds with digital asset collateral, yet they require structured evaluation under state lending rules. Therefore, the regulator emphasized that digital products remain subject to consumer protection standards. The penalty reinforces California’s position as it applies traditional financial expectations to emerging crypto services.

Nexo Faces Ongoing Challenges After Prior U.S. Penalties

Nexo’s latest penalty follows earlier enforcement actions across the United States. In 2023, the company paid $22.5 million to resolve a multistate case involving unregistered Earn Interest Products. It also paid another $22.5 million to federal regulators for failing to register crypto lending offerings.

These actions prompted Nexo to exit the U.S. market and suspend its traditional lending services for domestic users. The company maintained its international operations while reassessing compliance standards. The recent penalty now adds new pressure as it prepares for a strategic shift.

Regulatory scrutiny across crypto lending continues to intensify as authorities highlight recurring compliance failures. Consequently, analysts note that large penalties mark a pattern of systemic shortcomings. Nexo remains central to this landscape as regulators increase expectations for transparency and borrower protection.

Nexo Plans U.S. Reentry as Policy Direction Shifts

Nexo still intends to return to the U.S. market despite its regulatory setbacks. The company signaled renewed ambition during a 2025 event in Bulgaria featuring high-profile political figures. Leadership said evolving national policies encourage a more defined environment for digital asset firms.

The company plans to implement stricter licensing frameworks as it builds new consumer protection measures. Furthermore, Nexo aims to align future lending activities with state and federal requirements. This shift represents a strategic attempt to rebuild trust across key jurisdictions.

Nexo continues expanding abroad while preparing for a structured path back into the United States. Yet California’s action underscores that oversight will remain firm regardless of federal changes. The company now faces a demanding compliance horizon as it navigates stricter lending expectations.

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