NY State Attorney General sues cryptocurrency companies

New York State Attorney General Letitia James, along with securities regulators from seven states, are suing cryptocurrency companies Nexo Inc. and Nexo Capital Inc.

NYS Attorney General Letitia James

The suit alleges that the companies failed to register with the state as securities and commodities brokers or dealers – despite warnings from the state Office of the Attorney General (OAG) – and for lying to investors about their registration status. The AG alleges that Nexo misrepresented to investors that it is a licensed and registered platform. In New York, entities engaging in the offer, purchase, or sale of securities or commodities must register with OAG if they are operating in the state or offering their products to state residents.

“Cryptocurrency platforms are not exceptional; they must register to operate just like other investment platforms,” James said on Sept. 26. “Nexo violated the law and investors’ trust by falsely claiming that it is a licensed and registered platform. Nexo must stop its unlawful operations and take necessary action to protect its investors.”

Through the lawsuit, filed in New York County State Supreme Court, James is seeking disgorgement of any revenues derived from Nexo’s unlawful conduct and restitution for investors.

The suit stems from an investigation conducted in coordination with a working group of state securities regulators. State securities regulators of California, Kentucky, Maryland, Oklahoma, South Carolina, Washington, and Vermont all filed their own administrative actions against Nexo.

This case in New York is being handled by Assistant Attorney General Jesse Devine of the Investor Protection Bureau, with assistance from Legal Assistant Charmaine Blake, also of the Investor Protection Bureau, and Detective Investigator Brian Metz of the Investigations Division.