The same week that Bulgarian authorities raided Nexo’s offices and indicted four people on charges related to money laundering, the cryptocurrency lender filed a lawsuit in the Cayman Islands.
In a document dated January 12, Nexo filed a lawsuit against the Cayman Islands Monetary Authority, or CIMA, for denying its registration as a virtual asset service provider (VASP) in the island nation. The cryptocurrency lender asked the court to overturn the financial regulator’s decision, as it was “adequate” to provide crypto services to residents of the Cayman Islands.
According to court documents, Nexo applied to CIMA in January 2021, providing additional information at the regulator’s request. However, the monetary authority asked for clarification on the request in October 2022, citing “certain legal and regulatory issues noted in the media” that Nexo had not disclosed, and subsequently rejected the request in December 2022.
“The Authority breached its constitutional and statutory duty to provide understandable, satisfactory and sufficiently detailed reasons for its denial decision,” Nexo alleged.
Nexo alleged that CIMA had given “too much importance” to regulators bringing enforcement actions against the crypto lender, citing incidents in UK courts.. US state regulators also filed cease and desist orders against Nexo in 2022:
“[Nexo] has diligently cooperated with all US state and federal regulatory inquiries and has been proactive in maintaining dialogue with respective regulators […] There have been some regulatory ambiguities regarding the laws and regulations applicable to digital assets in the US such that the fact of regulatory enforcement does not in itself connote any misconduct.”
The lending firm announced in December that it planned to phase out operations in the United States “in the coming months,” citing a lack of regulatory clarity.
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