If you have been following the crypto scene then you know that SEC has been going after various CeFi platforms like BlockFi, Celsius, and Nexo. Recently BlockFi paid $100 million in fine for charges of breaking security law (washington post).
Of course the crypto bros tried to spin the settlement as a positive thing by calling it a “landmark resolution“. But the reality is that:
- U.S. customers will no longer be able to open new interest accounts with the firm.
- Existing clients can continue receiving interest on their existing holdings, but cannot add new assets to their accounts (cnbc).
Needless to say they have lost a portion of their customer base and are what is worse is that they are flat-out barred from acquiring new customers from US.
Anyway, today Nexo has followed BlockFi’s path and made some adjustments on their own:
- Existing US customers will continue to earn interest on your current Savings Wallet balances only. However, New top-ups to your Savings Wallet as of today will not earn interest
- The Earn Interest Product in its current form will not be available for new U.S. clients.
You can read full detail on this reddit post in r/nexo. This is an interesting take especially because unlike BlockFi, Nexo is not located in US. Nexo has had a different strategy than BlockFi as they were purchasing acquiring of a SEC licensed broker (coindesk).
However, it is worth pointing out that back in 2018 Coinbase had purchased SEC-regulated broker dealer (cnbc) to stay out of SEC’s crosshair but we all know how that turned out. SEC made Coinbase cancel their Lend program which was supposed to provide 4% interest on USDC (verge). The amusing thing out of it all was Brain Armstrong’s (CEO of Coinbase) infamous tweet that called SEC behavior “sketchy”.
Anyhow, given that Nexo ran away without a fight, it will be interesting to see what Celsius does, especially since Celsius is actually located in US. Interestingly enough Celsius supposedly moved to US (from UK) fearing crackdown in UK (see this reddit thread).
Closing Remarks
Why is all of this blog worthy? It is important to the readers because I have been blogging about CeFi platforms that provide high yield and free withdrawal and we just witnessed two of them more or less exit out of US market. I suspect Celsius will be next as they have been in the crosshair of SEC in the past.
Afterward, I suspect SEC may go after “less known” CeFi platform that refuse to do what Nexo did. However, I suspect we will see various CeFi lending platforms copy the BlockFi model even before SEC comes after them.
So, what does this mean? If you fear there might be a bank run then this is the time to get out. However, it is clear that BlockFi seems to remains intact thus far. Alternatively, some of you may see this as a last opportunity to get signup bonuses on platforms like Celsius, which offers the best crypto bonuses.
