Nexo Now Sues Cayman Islands Regulator Regarding Virtual Asset License

Key Points:

• Nexo has filed a lawsuit against the Cayman Islands regulator for refusing the company a virtual asset license.
• The firm wants the CIMA decision reversed, and the court to rule that it is suitable to be registered and then order CIMA to register it.

Nexo, a cryptocurrency lending platform, is suing the Cayman Islands government for refusing the company a virtual asset license, according to The Block.

Firstly, the Cayman court filing that the Cayman Islands Monetary Authority denied Nexo’s application on December 20 because the firm’s business model did not match the acceptable risk profile. Nexo posed a risk to market confidence, consumer protection and the reputation of the Islands as a financial centre, according to the CIMA.

According to the complaint, Nexo directors and owners neglected to disclose to the CIMA a potential regulatory enforcement situation in the United States as well as proceedings in English courts.

Nexo’s attorneys contend that the CIMA’s decision was procedurally unjust and that the regulator also violated its constitutional and statutory obligations by failing to tell the lending firm of the specific basis for the denial. The firm also stated that during the application process, it addressed the regulator’s concerns.

According to the prosecutors’ office, 300 detectives, police officers, and security officials were involved in the operation on Thursday, which was part of a pre-trial probe “aimed at neutralizing an illegal criminal activity” of Nexo.

The lending crypto firm denied CIMA’s fears about litigation in English courts, claiming it was a dispute between the firm and a former employee about control of a BitMEX account. Meanwhile, Nexo wants the CIMA judgment overturned, and the court to find that the company is appropriate for registration and then require CIMA to register it.

Previously, Coincu reported on January 13, 2023 that Bulgarian authorities announced on Thursday that they had opened an investigation into alleged unlawful activity by Nexo, raiding the lender’s office and 14 other locations in Sofia.

Two of the suspects were previously detained, while the other two were being sought. They had been operating in the United Kingdom, Switzerland, Bulgaria, and the Cayman Islands since 2018, according to officials.

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