- A class action lawsuit has been filed against Nexo for allegedly changing XRP token loan terms without notice.
- Plaintiffs demand compensation for their XRP funds from the exchange.
Earlier this year, a customer of the trading platform Nexo named JunHan Jeong published an article titled “Please don’t use NEXO.” The customer accused the exchange of suddenly and without notice changing the terms of his XRP loan and preventing him from maintaining his loan-to-value (LTV) ratio. Jeon called the action fraudulent and harmful. The customer has now sued Nexo.
According to a document filed in the District Court Northern District of California, a class action has been filed against Nexo Financial LLC and 3 of its subsidiaries. In the lawsuit, Jeon is acting on behalf of himself and others in a “similar” situation.
A side effect of the lawsuit against Ripple
Jeon recounted his version of events in the referenced article. After the SEC sued Ripple, Nexo rushed to suspend the ability to repay loans with XRP. Jeon claims that Nexo solely based their decision to suspended XRP trading on the drop in the price of the token. The lawsuit accuses Nexo of breaching its terms and conditions:
As to the hundreds of Nexo customers who could have used XRP to maintain their LTV ratios, Nexo’s material breaches deprived them of the benefit of their bargain and excusedany obligation to maintain their LTV ratios, whether by postingmore digital assets as collateral or by paying down on their loans.
The plaintiffs demand compensation for their liquidated funds and for preventing them from maintaining their LTV by suspending XRP trading while Nexo was still evaluating the implications of the lawsuit against Ripple. The lawsuit states:
Nexo’s suspension of XRP payments and liquidation of these customers’ collateral therefore were unlawful, and these customers are entitled to recover the value of their XRP when Nexo suspended its use andthe value of their liquidated collateralas of breach (less the outstanding loan amounts on that collateral).
In addition, the plaintiffs demand that Nexo desist from engaging in similar conduct in the future and a court order preventing the platform from changing the terms of its Nexo Crypto Credit product without its client knowledge.
In particular, Jeong alleges to have lost 598,000 XRP estimated at $269,300 at the time. In addition, he used 47,000 XLM, 0.009 BTC, 168 LINK, and 6.16 ETH to meet his loan obligations valued at $169,400. The lawsuit states:
If Nexo were to acquire the “ownership” of the cryptoassets that Nexo customers post as collateral, this would be an extremely unfair result that unreasonably favors Nexo over its customers and that resulted from the Nexo customer’s lack of reasonable choice or negotiating power over the terms and conditions that Nexo imposes on customers without any negotiation.