Nexo Fined $500K in California Over Unlicensed Crypto Loans
The California Department of Financial Protection and Innovation (DFPI) has fined crypto lending platform Nexo Capital Inc. $500,000 for issuing thousands of crypto-backed loans to California residents without a proper state license — marking another regulatory setback for the well-known digital asset lender.
Coinccino 
What Happened
According to the DFPI’s investigation, Nexo issued at least 5,456 loans to Californians between July 2018 and November 2022 without holding the required California lending license. Regulators found that many loans were extended without evaluating borrowers’ ability to repay, checking credit history, or reviewing existing debt — a basic compliance requirement under state law.
“This case highlights that crypto-backed loans are still subject to financial protection laws,” said DFPI officials, stressing that consumer safeguards apply regardless of whether the lender is a traditional bank or a crypto-native firm.
In addition to the fine, Nexo must transfer all funds of California residents to Nexo Financial LLC — its U.S. affiliate that holds a valid state license — within 150 days.
Why This Matters
- Regulatory Pains Continue: This isn’t the first regulatory hurdle for Nexo in the U.S. In early 2023, the company agreed to a $45 million settlement with the Securities and Exchange Commission (SEC) and state regulators over its interest-bearing products.
- Consumer Protection Emphasis: California’s action underscores intensifying scrutiny of crypto lending practices, especially around underwriting standards and risk disclosures.
- Industry Implications: As crypto lending comes under tighter oversight, platforms operating across borders will likely need stronger compliance frameworks to avoid similar penalties.
Nexo has not yet publicly responded to the fine, but the growing regulatory pressure could influence how crypto lenders structure their products and operations in the U.S. moving forward.
