Cryptocurrency loan company Nexo is being sued for allegedly stopping trading its XRP token after federal authorities have started looking into Ripple, the company that offers the aforementioned tokens.
Junhan Jeong, the lead plaintiff in the Nexo XRP Cryptocurrency Class Action Lawsuit alleges that Nexo did not disclose to customers like him that they suspended trading XRP tokens and they kept the profits earned. Jeong says that he has lost an equivalent amount of a quarter-million dollars in the whole ordeal.
It all started in late 2020 when authorities from the Securities and Exchange Commission (SEC) has announced that it would look into allegations of Ripple officials selling unregistered security worth billions of dollars.
Nexo worked its business model by offering cash loans to customers in exchange for collateral cryptocurrency.
Called a ‘fiat loan,’ the crypto lender company gave cryptocurrency holders the option to instantly convert their crypto assets into hard usable cash by availing this type of loan.
Nexo uses a loan-to-value ratio scheme in order to determine the amount they can hand over to a borrower.
As everything went down, the value of the XRP token crashed, and soon after, Nexo has suspended its use of XRP tokens in all of its transactions.
It fluctuates all of the time due to influences in the market, and if the loan-to-value ratio is high, the crypto lender liquidates the collateral immediately.
At the height of the scandal involving XRP token and its company, Nexo then proceeded to sell out massive quantities of its XRP tokens collected from its borrowers.
This, according to the class action, is a violation of its own operating terms and conditions.
Plaintiff Jeong argued that this hidden deliberate move by Nexo of barring trading of XRP tokens in its platform and selling the tokens they have got on hand ended up hurting him and other similarly situated borrowers.
Filed in the United States District Court Northern District of California, the Nexo XRP Cryptocurrency Class Action Lawsuit is accusing Nexo of violating California consumer protection statutes.
Complainant Jeong is seeking to establish and represent a Nationwide Class and California Subclass of similarly situated borrowers.
He is also asking the court to force the company to hand him over more than five million dollars for damages Nexo has caused him throughout the whole ordeal.
About the company
Nexo is a for-profit company that mainly provides debt financing and other monetary solutions to its customers. Based in London, the United Kingdom, the company was founded in 2017 by founders Kosta Kantchev, Antoni Tenchev, and Georgi Shulev. The company currently manages assets worth more than $12 billion, according to its official LinkedIn profile.
Editor’s Note on Nexo XRP Tokens Class Action Lawsuit:
This article feature aims to give you information about the latest class action lawsuit filed against crypto loan company Nexo after it had allegedly suspended trading of XRP tokens when it was embroiled in a scandal.
It was also alleged that Nexo proceeded to keep the profits made from secretly selling off its XRP tokens stash and ended up hurting customers who are mostly crypto enthusiasts and traders.
Case Name & No.: Jeong v. Nexo Financial LLC, et al.; Case No. 5:21-cv-02392-NC
Jurisdiction: United States District Court Northern District of California
Products/Services Involved: Nexo’s cryptocurrency services, including fiat loans
Allegation(s): Nexo has been accused of knowingly inflicted financial harm towards its customers after it has suspended trading of XRP tokens on its platform without any prior notice.
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