Crypto lender Nexo files lawsuit against Cayman Island regulatory body

• Nexo was rejected for a virtual asset license by the CIMA due to the firm not meeting the required risk profile.
• Nexo recently announced that it would be departing from the United States following a fallout with regulators.
• The crypto market recovered nearly $130 billion over the last week to bring the total value of all cryptocurrencies to $944 billion.

Nexo has been making headlines over the last couple of weeks for reasons that have increasingly not been in its favor. As per the most recent development, the cryptocurrency lending platform has found itself at crossroads with another country’s regulatory authority following the United States.

Nexo vs. the Cayman Islands Monetary Authority

Nexo, in a January 13 filing, sued the Cayman Islands Monetary Authority (CIMA) following the denial of a virtual asset license. The lawsuit came following the regulatory body rejecting the crypto lender’s request due to the company not meeting the necessary risk profile. 

The monetary authority noted that Nexo’s approval for a license would pose “a risk to market confidence, consumer protection and the reputation of the Cayman Islands”. 

However, Nexo and its lawyers objected to the outcome, saying CIMA’s decision was unfair and that the regulatory body did not fulfill its constitutional and statutory duties. This is because Nexo was not provided with a detailed reason for the rejection of its application. 

With the lawsuit, Nexo is not only looking for the Cayman Islands Monetary Authority’s decision to be invalidated but also ruling in favor of the crypto lender’s registration. Pronouncing Nexo as suitable for registration and ordering CIMA to register the company is Nexo’s goal by the end of the lawsuit.

This is not the first time Nexo has locked horns with a regulatory authority, as earlier last month, the crypto lender had a fallout with the United States regulators as well. In a first-of-its-kind event, Nexo announced that it would also be pulling out of the country, phasing out its products and services in the coming months. 

Nexo stated that despite being cooperative with state and federal regulators, including the Securities and Exchange Commission (SEC), the inconsistent standings prompted the move.

Crypto market cap nears $1 trillion

The crypto market managed to rise by more than $128 billion in the last seven days, bringing the total market capitalization to $947 billion at the time of writing. The value of all cryptocurrencies is nearly at the mark before the FTX collapse of November 2022, which wiped out $255 billion from the market.

Total crypto market capitalization

With Bitcoin crossing the $21,000 mark and the leader of the altcoins, Ethereum, trading near $1,600, the crypto market is set to reclaim the $1 trillion mark soon. If the bullish momentum persists over the next few days, another 5% rally shouldn’t be difficult to achieve for the market.