Nexo Sues Cayman Island Regulator
According to a lawsuit filed on January 12, Nexo, a crypto lender, has sued the Cayman Islands Monetary Authority (CIMA) for denying it registration as a VASP.
In rejecting Nexo’s registration, the lender claims that the regulator gave “too much weight” to regulators’ enforcement actions.
Nexo has asked the court to overturn CIMA’s decision because it is “suitable” to provide crypto services to Cayman Islands residents. Nexo’s application was rejected by CIMA on December 20, stating that the company’s business model did not meet the required risk profile:
Nexo posed a threat to market confidence, consumer protection, and the Islands’ reputation as a financial centre.
According to the lawsuit, Nexo directors and shareholders failed to disclose potential regulatory enforcement matters in the United States and proceedings in English courts to CIMA. Nexo’s legal counsel claims that CIMA’s decision was procedurally unfair. It also claims that the regulator violated its constitutional and statutory duties by failing to provide Nexo with a detailed reason for the VASP licence rejection. Nexo, on the other hand, claims that it addressed CIMA’s concerns during the application process.
Nexo dismissed CIMA’s concerns about litigation in the United Kingdom in its filing, claiming that it is simply an action brought by crypto exchange BitMEX against Nexo and one of its former employees over ownership of a BitMEX account.
Nexo seeks not only to have the CIMA decision reversed, but also for the court to rule that Nexo is competent to be registered to offer crypto services. Finally, it wants CIMA to issue it a VASP registration.
(With inputs from Shikha Singh)
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