A family of investing entrepreneurs are suing Nexo for preventing them from withdrawing their funds and claim they were intimidated into selling crypto assets back to the lender at a 60% discount. Nexo has vehemently disputed these claims.
Many centralised crypto lenders are feeling the pinch right now. If they aren’t in bankruptcy then they are very likely struggling with the lack of liquidity which is something the entire crypto space is suffering from.
Nexo’s case is slightly different, given that hitherto the crypto lender has not received any allegations of insolvency, and the company is also disputing the facts.
City A.M. covered a story earlier today of two brothers and their cousin who filed a lawsuit against Nexo, claiming that it had blocked their access to withdrawing the value of more than $126 million in cryptocurrencies, and that they had been intimidated into selling discounted $NEXO tokens worth millions back to the crypto lender under the threat of not being able to withdraw.
The Mortons are a family of fintech entrepreneurs who originally began to have concerns over their investments in Nexo back in 2020. The concerns included Nexo’s status with the FCA, the UK regulatory watchdog, along with the amount of $NEXO tokens owned by employees of the company.
The Mortons shared their concerns with Nexo in December 2020, but felt that they hadn’t received a satisfactory response, and so started to sell their $NEXO tokens in amounts that they hoped wouldn’t affect the token price.
However, in March of 2021 Nexo imposed a withdrawal limit of $150,000 a day, and then went a step further the following day by greying out the withdrawal buttons on their apps, which prevented them from withdrawing any of their cryptocurrency at all from the platform. In addition, the two Morton brothers had their convert button greyed out, thereby preventing them from converting any of their cryptocurrencies.
At this point the Mortons contacted Nexo and were told by an account manager that the blocks were applied to their account in order to “support the price of Nexo tokens.” The manager then offered a deal to unblock withdrawals if the Mortons would sell their $NEXO tokens back to the company for a 60% discount.
The Mortons accepted the deal and were then able to remove nearly $39 million in Tether stable coins. However, had they been able to remove their $NEXO tokens at the time they originally wanted to, then they would have been worth around $84.5 million.
Nexo disputes claims
A blog on the Nexo website does dispute the claim, calling it “opportunistic”. Further to this, Nexo says that the Mortons made a substantial profit from trading their $NEXO tokens. The blog reads:
“all transactions, including the sale of their Nexo tokens, were completed in good faith, were documented and were accepted as final by the claimants at execution. Having made substantial profits from trading their Nexo tokens, the claimants withdrew all their assets from the Nexo platform and they are not disputing this fact.”
Transaction data for the cryptocurrencies in question are also linked to Blockchain.com and Etherscan. Nexo also wishes to underline the fact that the Mortons were able to successfully withdraw all of their assets.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.