July 24, 2021

Nexo faces lawsuit for liquidating $5m in client collateral amid XRP delisting

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United States-based crypto lending platform Nexo is facing a class-action lawsuit over suspension of XRP services on Dec. 23, 2020.

Lead plaintiff, California resident Junhan Jeong submitted the complaint on April 1. The complaint accuses Nexo of breaching its user agreement by suspending the use of XRP as loan collateral without notifying its customers beforehand. The suspension followed the SEC’s legal action against Ripple Labs for conducting unregistered securities offerings on December 22.

Nexo allows users to borrow fiat currency or stablecoins using over-collateralized loans that are backed by crypto assets. Should price fluctuations in the crypto markets cause loans to no longer meet the platform’s required loan-to-value, or LTV, ratio, the complaint cites Nexo’s terms of service as stating that “Nexo will — after providing notice to the customer — sell the collateral to bring the LTV ratio back in line.”

Jeong alleges that Nexos reacted to the SEC’s announcement by suspending the use of XRP as collateral, to pay down loans, and for staking on Dec. 23. As a result, many users were left unable to support their loan positions, prompting wholesaleTitle: Nexo faces lawsuit for liquidating $5m in client collateral amid XRP delisting
Sourced From: cointelegraph.com/news/nexo-faces-lawsuit-for-liquidating-5m-in-client-collateral-amid-xrp-delisting
Published Date: Tue, 06 Apr 2021 04:09:44 +0100