Nexo faces lawsuit for liquidating $ 5 million of client collateral amid delisting XRP

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2021-04-13 11:44:51

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Crypto lending platform Nexo has been accused of causing a $ 5 million liquidation of customer assets after suspending its use of XRP as collateral without giving prior warning in December.

US-based crypto lending platform Nexo is facing a class action lawsuit over the suspension of XRP services on December 23, 2020.

The main plaintiff, California resident Junhan Jeong filed the complaint on April 1. The complaint alleges that Nexo violated the user agreement by suspending the use of XRP as collateral for the loan. notice to customers in advance. The suspension comes after the SEC sued Ripple Labs for conducting unregistered securities offerings on December 22.

Nexo allows users to borrow fiat or stablecoins using crypto-backed collateralized loans. If volatility in the crypto market causes loans to no longer meet the platform’s required loan-to-value ratio or LTV, then (the complaint) cites Nexo’s terms of service that “ Nexo will – after notifying customers – sell collateral to bring back the right LTV ratio. ”

Jeong alleges that Nexos responded to the SEC’s announcement by suspending the use of XRP as collateral, for loan payments and staking on December 23. support their loan positions, resulting in liquidation on the platform.

Furthermore, the plaintiff accused Nexo of selling off the customer’s XRP and pocketing the proceeds, stating:

Due to the substantial drop in the price of XRP, on December 23, Nexo suspended customers’ use of XRP as collateral or payment of loans, they did so without providing notice of the suspension. Nexo does so because he doesn’t want to have to withhold XRP numbers at a significantly reduced value – (which) not because Nexo believes in advice against using or selling the SEC’s XRP.

According to the lawsuit, the suspension of Nexo’s operations resulted in the liquidation of the customer’s assets worth more than $ 5 million. The plaintiff also alleges that Nexo’s liquidation of XRP contradicts the company’s claim that it does not have ownership of users’ collateral.

Nexo has yet to comment on the allegations, however, the platform recently filed a lawsuit against its former client, Lance Johansen, about the many negative reviews the defendant made on the platform. Trustpilot review platform in early 2021.

In particular, Nexo is targeting Johansen’s comments claiming that the platform is operated by a criminal and uses a bot account to spread fake news …

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