United States-based crypto lending platform Nexo is going through a class-action lawsuit over suspension of XRP services and products on Dec. 23, 2020.
Lead plaintiff, California resident Junhan Jeong submitted the grievance on April 1. The grievance accuses Nexo of breaching its person settlement by way of postponing using XRP as mortgage collateral with out notifying its shoppers previously. The suspension adopted the SEC’s criminal motion towards Ripple Labs for carrying out unregistered securities choices on December 22.
Nexo lets in customers to borrow fiat forex or stablecoins the usage of over-collateralized loans which might be subsidized by way of crypto belongings. Should worth fluctuations in the crypto markets reason loans to not meet the platform’s required loan-to-value, or LTV, ratio, the grievance cites Nexo’s phrases of provider as pointing out that “Nexo will — after providing notice to the customer — sell the collateral to bring the LTV ratio back in line.”
Jeong alleges that Nexos reacted to the SEC’s announcement by way of postponing using XRP as collateral, to pay down loans, and for staking on Dec. 23. As a outcome, many customers have been left not able to fortify their mortgage positions, prompting wholesale liquidations around the platform.
Further, the plaintiff alleges Nexo “unjustifiably” bought off shoppers’ XRP and pocketed the proceeds, pointing out:
“Seeing the price of XRP thus drop significantly, on December 23, Nexo suspended customers’ use of XRP to stake as collateral or pay down on loans and did so without providing notice of the suspension. Nexo did so because it did not want to be left holding XRP at its substantially decreased value—not because Nexo believed that the SEC’s announcement counseled against the use or sale of XRP.”
According to the lawsuit, Nexo’s suspension resulted in the liquidation of greater than $5 million value of its shoppers’ belongings. The plaintiff additionally alleges that Nexo’s XRP liquidations contradicted the corporate’s declare it doesn’t possess possession rights of customers’ collateral.
Jeong is looking for restitution for the alleged losses incurred from the XRP suspension, at the side of an order pointing out Nexo’s contractual rights:
“Declaration regarding the parties’ contractual rights is necessary because the rights and obligations at issue are central to the very operation and use of the Nexo Crypto Credit, and because Nexo’s public statements demonstrate that the parties have a fixed and genuine dispute over those rights and obligations.”
Nexo is but to remark at the accusations, on the other hand, the platform just lately filed a defamation lawsuit towards its former buyer, Lance Johansen, over more than one unfavourable opinions the defendant revealed on evaluation platform Trustpilot in early 2021.
In explicit, Nexo is taking intention at Johansen’s feedback claiming the platform is operated by way of an ex-felon, makes use of bot accounts to disseminate faux information, and that it purposely “robbed all XRP owners blind” via its suspension of the token.