Lawsuit Being Faced by Nexo for $5 Million Liquidation in Client Collateral

As per the latest reports, Nexo is currently facing a class-action lawsuit. It has been revealed that the lawsuit has been filed against the platform against its suspension/delisting of XRP services. According to a report, Nexo had suspended the XRP service through its platform back on December 23, 2020.

Nexo is a prominent cryptocurrency lending platform that is based in the United States. The lawsuit against the crypto-lending platform has been filed by Junhan Jeong, who is a resident of California.

The sources have revealed that the plaintiff had submitted the complaint about the lawsuit against Nexo back on Thursday, April 1, 2021.

In the complaint, the plaintiff (Junhan Jeong) has claimed that the crypto-lending platform has breached its user agreement. He has claimed that Nexo went onto suspend/delist the XRP service on its platform as loan collateral. Jeong claimed that the Nexo did this without even bringing it to the notice of the customers/consumers.

Nexo had reportedly delisted XRP from its platform following the lawsuit that had been filed against the Ripple Labs by the US SEC. In the lawsuit, the US Securities and Exchange Commission accused Ripple of selling unapproved/unregistered securities to US citizens.

Therefore, Nexo, being a cryptocurrency lending platform based in the United States took the step of suspending XRP. The firm had the intention of keeping the asset delisted/suspended until the lawsuit between the two entities was resolved. The lawsuit against Ripple Labs was reportedly filed by the US SEC back on December 22, 2020.

In the lawsuit, Jeong alleged that following the announcement of SEC’s lawsuit against Ripple Labs, Nexo was quick to act. Therefore, the very next day on December 23, 2020, it went ahead and delisted/suspended XRP from its platform.

This resulted in the users being unable to access XRP to utilize services such as staking, pay down loans, and collateral. This eventually resulted in the users being unable to support the positions of their loans. In order to come out of this situation, the users had to go for wholesale liquidation all over the Nexo platform.

Jeong claimed that by doing this, Nexo eventually ended up profiting from selling the XRPs that belonged to the users. The firm managed to gain and keep the proceeding they were able to generate from the selling of the XRPs.

In the complaint, Jeong claimed that in reality, it wasn’t the lawsuit filed by SEC that compelled Nexo to make the decision. The main reason was that Nexo didn’t want to hold the XRPs at such a low price as it had started dropping after SEC’s lawsuit announcement.

Jeong claimed that as a result of the liquidation, the firm was able to generate $5 million that belonged to the customers, not the firm.