California’s Department of Financial Protection and Innovation (DFPI) fined crypto lending platform Nexo Capital Inc. $500,000, alleging the company made crypto-backed consumer and commercial loans to Californians without the required state license. 

In a consent order, DFPI concluded that the Cayman Islands-based corporation offered loans to at least 5,456 California residents from 2018 through 2022, and generally did not assess borrowers’ ability to repay, including by reviewing existing debt, credit history, or other financial-condition documents. 

The regulator said that lack of underwriting increased default risk and violated the California Financing Law and the California Consumer Financial Protection Law. Nexo must, within 150 days, transfer all funds belonging to California residents to Nexo Financial LLC, a U.S.-based affiliate that holds a California Financing Law license and is required to comply with state licensing and disclosure rules. 

DFPI Commissioner KC Mohseni said the agency will keep pursuing firms that “break the law and put consumers’ financial security at risk.”

Read more at DFPI