A California resident has filed a complaint against crypto lender Nexo, alleging fraudulent inducement and millions of dollars in losses as a result. The suit, filed on Monday in the U.S. District Court in the Northern District of California, accuses Nexo of making false claims to convince John Cress to borrow against his digital assets and invest in complex financial products rather than simply earning interest on his assets.

Misrepresentations Alleged

According to the complaint, Cress had a Nexo interest-bearing account and moved his digital assets to the platform to earn interest. The suit alleges that Nexo made false assertions to convince Cress to borrow against his deposited digital assets and invest in complex financial products rather than simply earning interest on his assets. Ultimately, Cress alleges he suffered millions of dollars in losses because of these misrepresentations when he was liquidated of substantially all his digital assets.

Cress has been a long-time investor in crypto, having bought bitcoin in 2014 and ether in 2017. He transferred these assets to Nexo in March 2021 to earn yield on his assets.

Regulatory Actions Against Nexo

Cress also noted that Nexo has faced regulatory legal actions, including the SEC’s charges in January for failing to register the offer and sale of its Earn Interest Product. Nexo agreed to pay $45 million in total to the SEC and state regulatory authorities. Last December, Nexo announced that it would “gradually” leave the U.S. after unsuccessfully petitioning the Consumer Financial Protection Bureau to argue that it was outside the bureau’s jurisdiction, after the consumer financial regulatory began investigating the crypto lender.

Nexo Responds

In response to the suit, Nexo and its co-founder Antoni Trenchev rejected the claims made by Cress, calling them unfounded. A Nexo spokesperson stated that “Mr. Cress has previously been in contact with us regarding his Nexo account, but he himself walked away from the conversations. Thus, we believe that this court claim has opportunistically been filed now due to the news of our phasing out Nexo’s products from the U.S. market.”

Allegations of Fraudulent Inducement

The suit filed by Cress against Nexo centers on allegations of fraudulent inducement. It claims that Nexo misled Cress into borrowing against his digital assets and investing in complex financial products rather than simply earning interest on his assets. The suit also notes regulatory legal actions against Nexo, including the SEC’s charges in January for failing to register the offer and sale of its Earn Interest Product.

Nexo Responds to Claims

In response to the suit, Nexo and its co-founder Antoni Trenchev rejected the allegations made by Cress. The firm stated that Cress had previously been in contact with Nexo regarding his account but walked away from the conversations. Nexo believes that the court claim has opportunistically been filed now due to the news of the firm’s phasing out of its products from the U.S. market.

Source: TheBlock