- Nexo has issued a response to a recent lawsuit and online criticism claiming that it breached its terms and conditions by liquidating users’ XRP in light of a price crash.
- The company has also pledged to take the matter to court, seeking indemnity for the reputational damage it has suffered, as it was “well within its rights” in taking the actions it did.
All the actions we undertook in response to the SEC’s lawsuit against Ripple Labs were in full compliance with applicable laws and our terms and conditions. This is the response Nexo has given to a recent lawsuit accusing it of unlawful liquidation of XRP. The company has stated that the plaintiff lacks any understanding of the relevant laws and how markets operate.
The legal drama has ensued following the SEC’s lawsuit against Ripple Labs in December. The regulator accuses the San Francisco company of selling unregistered securities in XRP. The ripple effects were huge, from XRP delisting by major firms to an overnight price crash.
As CNF reported, the most recent ripple effect is a lawsuit by one investor accusing a cryptocurrency lending platform of unlawful practices. JunHan Jeong wrote a blog post urging the cryptocurrency community to refrain from using Nexo. The London-based firm operates a cryptocurrency lending firm that claims to have over a million users and $12 billion in assets under management. Jeong followed the post with a lawsuit claiming Nexo rushed to suspend the ability to repay loans via XRP. This was after the token’s price crashed overnight after the SEC lawsuit.
We followed the law, and our T&Cs
In its response, Nexo has denies any wrongdoing, stating that all its actions were legally justified.
The actions Nexo undertook as a result of the SEC’s lawsuit against Ripple Labs and its founders were thus in full compliance not only with all applicable laws and regulations, but also with the contractual provisions governing Nexo’s relations with its clients.
Nexo admits to suspending XRP services following the SEC lawsuit. However, it points out that it was just one of many firms that did this. Coinbase, Gemini and Binance were among the other market leaders who suspended XRP trading. The SEC lawsuit would require all XRP service providers to obtain a specific license to offer a security.
The reason XRP repayments – as a particular transaction type – were temporarily suspended is that repayment, by its nature, constitutes a type of exchange service offered by Nexo. XRP withdrawals and collateral top-ups remain available to all users at all times as they do not constitute an exchange.
Nexo denied Jeong’s claims that it breached its terms and conditions (T&Cs). These terms indicate that Nexo is within its rights to occasionally impose certain rules on loan repayments. This allowed Nexo to suspend XRP loan repayments. However, clients were still at liberty to withdraw their XRP and trade it on other platforms. In addition, Nexo still allowed the clients to repay their loans with other cryptocurrencies.
Any client who sued Nexo or published unsavory comments against it online doesn’t understand the applicable laws, the firm stated. They also don’t understand the contractual arrangements Nexo has with its clients or how markets operate.
Nexo to take legal action
The firm doesn’t take lightly the accusation and warned any person making false claims that they are breaking the law. “It is unlawful for an individual to make deliberate statements or incite other persons to do so that intend to harm the reputation of a business without any factual evidence and, as such, we are seeking full indemnity for the reputational damage we have suffered,” it stated
The company has reportedly been attempting to settle disputes relating to XRP amicably for months now. These include a cease and desist letter it recently issued to individuals it believes are trying to damage its reputation.
It is unfortunate that the individuals in question failed to meet our requests, forcing us to transfer the matter to our legal counsels to ensure our rights and hard-earned reputation are protected by all legally available means.