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A California resident has filed a class action lawsuit against cryptocurrency loan provider Nexo after it allegedly suspended trading of the XRP token. This comes a few short months after the announcement of a federal investigation into Ripple.
Lead plaintiff Junhan Jeong claims that Nexo failed to notify users of the move in his lawsuit filed in California federal court last week. Additionally, Jeong claims that Nexo then sold users’ XRP tokens without consent and kept the money. Jeong claims that he lost the equivalent of more than $250,000 to the cryptocurrency lender.
Jeong seeks to represent a nationwide Class of Nexo users, along with a subclass of California residents. He is claiming more than $5 million in damages.
The lawsuit says that since April of 2018, Nexo has operated a website that allows users to borrow cash — also known as “fiat money” — by putting up their cryptocurrency as collateral.
“Using Nexo’s ‘Crypto Credit,’ a customer takes out a ‘fiat loan’ by staking any variety of cryptoassets in their ‘Credit Line Wallet’ to serve as collateral and by funding a ‘Savings Wallet’ to serve as back-up collateral,” explains the class action.
The amount of cash Nexo users can borrow is based on their loan-to-value ratio, according to the complaint, and fluctuates depending on the cryptocurrency held as collateral by the company. If this ratio becomes too high, Nexo liquidates the collateral, says the lawsuit.
In December 2020, the Securities and Exchange Commission announced an investigation into Ripple, the company that offers XRP tokens, a type of cryptocurrency. Ripple and two of its executives were accused of raising billions by selling an unregistered security.
The announcement caused the value of XRP to drop by over 50 percent, says the class action lawsuit. In the aftermath, Nexo allegedly suspended the use of XRP tokens on its website as collateral for fiat loans, or cash.
Nexo then proceeded to seize and sell massive amounts of XRP that users had put up as collateral for their loans, says Jeong, who claims that the cryptocurrency lender violated its own terms and conditions.
Jeong also alleges that by freezing the use of XRP, Nexo effectively barred users from maintaining their loan-to-value ratios. The company then purportedly liquidated Nexo users’ collateral and kept the cash.
The class action lawsuit claims that Nexo breached its own contracts with customers and violated California consumer protection laws. Additionally, the plaintiff accuses the company of retaining money from the collateral it sold rather than giving it back to users.
Were your assets sold by Nexo? Were you affected by the Ripple investigation or suspension of the XRP token? Tell us about it in the comment section below!
The plaintiff is represented by Kyle W. Roche, Edward Normand, Katherine Eskovitz, and Stephen Lagos of Roche Freedman LLP.
The Nexo XRP Class Action Lawsuit is Jeong v. Nexo Financial LLC, et al., Case No. 5:21-cv-02392-NC in the U.S. District Court Northern District of California.
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16 thoughts onCryptocurrency Loan Provider Accused of Violating User Agreement, Claims New Class Action Lawsuit
Well said. 100% agree.
Sorry to read about your significant losses. I am a victim of Nexo Dec liquidations as well.
Cant believe they removed XRP repayment method with no wsrning as price began to drop! 100% intentional!
Yes i lost over 30,000 XRP in the Dec liquidations. Mainly because no warning, and the removal of XRP repayment method, as XRP price was starting to drop. Could not get more assets on platform in time. Thought the deactivtion of repayment was a temporary glitch. It was not. I want in!
Please add me, I had several several thousand in ripple prior to the liquidation
Please add me.
I had $82k in assets at one point on Nexo. After liquidations I now have $5k with a 50% loan against them. The entire platform is based on deception and misrepresentation designed to confuse consumers. Further, the statements they make to justify the liquidation of their customers are simply not accurate or possible. It is impossible to sell an asset at market price on an exchange instantly and credit a user. It takes 10 minutes to transfer crypto from one exchange to another. They make every effort to confuse the borrower so they do not know how much they owe on a loan or even that they have a risk of being liquidated. They represent borrowers have a loan for a year and if the value decreases they will make small payments on the loan. 0.2 bitcoin is not a small payment and if the most you can borrow is 50%LTV then there is no mathematically possible way for $82k to go to $5k. The order in which they sell your asset and repay your loan and the price at which they do so is designed for the borrower to make payments at the lowest prices allowing Nexo to take them and only pay small portions of the loan. Literally second later the value has increased by 5-10% and Nexo has your collateral and you are left with nothing after years of saving. The worst part is you still owned 17% more collateral than you owed and they stole your money.
I should have a minimum of $40k in collateral right now and a loan at 6% instead I have $4k in Nexo tokens they wont let me use to repay the loan and they have 0.5. Btc, 7 ETH, $10,000+ USDT, Chainlink, BNB, and Light Coin and a $2k loan.
I would much rather have my assets and a $40k loan, then nothing and a loan that was paid off at the lowest point of the market with a company who keeps justifying that I have lost my hard earned collateral because I am an idiot and that they do not gain from their users collateral. That liquidations are necessary to keep everyone safe. I borrowed against my own collateral. There was no
Risk for anyone else. After evaluating the design and layout of the platform it is the definition of fraud. It is a scheme to confuse unwitting investors to take out loans and have their assets liquidated at the bottom of the market. Nexo buys low and sells high. It’s disgusting and I lost everything. I want in.
This is not just about XRP it is NEXO period. Please help.
Had over 8000 xrp. I had taken about $4000 out in loan. Nexo warned about the value of my collateral assets. If it fell below certain amount, small partial repayments would be taken. When that happened, they sent me 3 notifications about 5 min apart wanting me to add assets. Same day they took 50% of my xrp. Small? Partial? That destroyed me
Yes lost over 800k because I couldn’t pull the money out because the network was “tied up” from congestion. Completely illegal.
I recently had 2 ETH sold off to make a ‘small repayment’ of 50% of my loan without warning. In fact the warnings arrived 7 hours after they silently sold my assets for a fraction of what I bought them for.
Nexo sold off 50,000 of my coins during this time too. How do I join the suit?
I lost 200 000 xrp 20000 xlm and 2.3 Bitcoin in the nexo liquidation of assets.
Can I also join the class action for compensation, I reside in Australia.