Nexo Co-Founder Details Crypto Lender’s Plan to Stay Out of Regulators’ Crosshairs

Nexo wants to avoid the fate of BlockFi and Celsius, which are under investigation by U.S. state regulators.

Sep 20, 2021 at 11:21 p.m. UTC
Updated Sep 21, 2021 at 1:47 p.m. UTC

The co-founder and managing partner of cryptocurrency lender Nexo has a plan for when securities regulators come knocking on the lender’s door.

Antoni Trenchev said that while U.S. regulators have pressured U.S.-based lending platforms first (BlockFi and Celsius), any company with a presence in the U.S. will have to “cross the same bridge” eventually, including London-based Nexo. Trenchev did not respond to a question about whether or not regulators have already approached Nexo.

“We’re following the situations very closely,” Trenchev said. “When I say we, I mean both the legal team internally at Nexo and also the law firms we retain in the United States.”

First, Nexo is pursuing an acquisition of a Securities and Exchange Commission (SEC) licensed broker dealer through which it could offer “a modified version” of Nexo products. Second, the lender is talking with nationally chartered banks that might be willing to partner with Nexo and let Nexo offer its products under a bank charter. Third, Nexo would apply for an exemption to offer securities to non-accredited investors.

“We haven’t quite decided on the particular variations of the exemptions and exactly how we’re going to structure this,” Trenchev said.

Celsius, BlockFi, Nexo and Ledn offer both a lending product and a depository yield-earning product that is powered by the interest rates that each firm charges on the lending side of the house. Ledn did not respond to a request for comment.

Crypto lender Unchained Capital, for instance, told CoinDesk that it does not offer depository accounts and therefore no yield on deposits. Coinbase, the largest U.S. exchange, said on Friday that it no longer plans to offer a lending product that would have powered a savings account for customers with a 4% annual percentage yield.

CORRECTION (Sept. 21, 12:02 UTC): An earlier version of this story said Trenchev was Nexo’s CEO. He’s the lender’s co-founder and managing partner.


DISCLOSURE

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Nate DiCamillo is a business reporter at CoinDesk with a focus on banking and economics.