By Upmanyu Trivedi
Cryptoasset lender, Nexo Capital Inc., was sued in London by investors who allege they were blocked from withdrawing parts of their $126 million in assets from the exchange in March 2021, when one Bitcoin was worth more than $54,000.
Nexo froze the accounts of two brothers and their cousin in late March 2021 and pressurized them into selling its own token back at a heavily discounted rate, lawyers for the investors said in the lawsuit. Owen and Jason Morton, and their cousin Shane Morton said they were forced to sell the tokens at about a 60% discount of the market price, they alleged.
For its part, Nexo said the claims are opportunistic and come from a group of wealthy, sophisticated investors who made “lucrative transactions.”
“All transactions, including the sale of their Nexo tokens, were completed in good faith, were documented and were accepted as final by the claimants at execution,” the exchange operator said in a Nov. 11 blog post.
Nexo, founded in 2018 and managed by former Bulgarian politician Antoni Trenchev, has faced several legal challenges in 2022 as the crypto lending industry found itself at the forefront of the sector’s worst bear market in years. The firm rebuffed speculation last month that it might join former rivals Celsius Network and Voyager Digital in heading for bankruptcy, after Nexo received cease and desist orders from eight US states in September that alleged the platform was offering interest-earning accounts without registering the investment products as securities.
The Mortons purchased Nexo tokens worth millions of dollars in 2019 and 2020 and used the platform to trade other cryptocurrencies and tokens to get interest-earning benefits on the exchange, they said.
The three investors decided to withdraw from platform in late 2020 as they were concerned about Nexo Capital’s compliance with regulations in US, UK and European Union, they said in the filing.
When Nexo used “illegitimate threat” by disabling functions to withdraw, the Mortons agreed to convert their tokens to Tether’s USDT, a stablecoin pegged to the dollar, according to the lawsuit. That same day the trio emptied their accounts that included over 350 Bitcoins, over 50 million in USDT, and millions of other tokens. They seek damages to make good the losses.
(Updates with details from lawsuit in seventh paragraph.)
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