2021-4-7 04:56 |
Crypto lending platform Nexo received a lawsuit by a customer for “unlawful suspension” of XRP in December 2020, a day after the SEC sue Ripple for security violation charges. The customer claims over $5 million was liquidated as Nexo suspended the ability to pay back loans or add collateral using XRP.
The U.S. Securities and Exchanges Commission (SEC) sued Ripple on December 22nd for securities offering violations, leading to multiple exchanges delisting or suspending XRP transactions on their platforms. In December, Nexo removed the payback option for the XRP loans without notice leaving clients perplexed on how to pay back their loans. Nexo posted on Twitter,
“Nexo is one of the few crypto companies that has complied with regulation which is why we registered our token sale with the SEC in 2018. The space grows with institutional adoption & the next big companies will be the compliant ones“
Multiple clients faced liquidation on their XRP collateral as the price of XRP dropped to $0.10 following the SEC news. Junhan Jeong, a Californian resident, has moved to court accusing Nexo of causing over $5 million in XRP liquidations by stopping XRP loan payments in December.
In a class-action lawsuit filed at the United States District Court Northern District of California, the plaintiff claims Nexo “acted in bad faith” and seeks redress for the nationwide harm resulting from Nexo’s intentional and unjustified suspension” of XRP on December 23, 2020.
The filing further claims Nexo prohibited clients from maintaining their loan-to-value (LTV) ratio, which is the ratio between the loan borrowed and collateral held in the credit wallet. Consequently, the platform liquidated the clients’ assets for not maintaining this ratio.
If the ratio exceeds 83.6%, the customer must deposit additional cryptocurrency as collateral or pay back the loan to avoid being liquidated. As XRP prices dropped from highs of $0.40 to less than $0.11, most of the clients who had used XRP as collateral saw their accounts liquidated. This happened as Nexo prohibited any collateral additions using XRP, a move that the lawsuit considers “unlawful and unfair business practices to clients.”
“Nexo’s suspension of XRP payments and liquidation of these customers’ collateral, therefore, was unlawful.”
“These customers are entitled to recover the value of their XRP when Nexo suspended its use and the value of their liquidated collateral as of breach (less the outstanding loan amounts on that collateral).”
Jeong claims he lost his collateral of 598,384.6188 XRP at a market value of approximately $269,300 (less his outstanding loan amount of approximately $169,400). Those coins are now worth over $600,000.
XRP/USD XRPUSD 0.9604 $0.07 6.95% Volume 31.18 b Change $0.07 Open$0.9604 Circulating 45.4 b Market Cap 43.6 b baseUrl = "https://widgets.cryptocompare.com/"; var scripts = document.getElementsByTagName("script"); var embedder = scripts[scripts.length - 1]; var cccTheme = {"Chart": {"fillColor": "rgba(248,155,35,0.2)", "borderColor": "#F89B23"}}; (function () { var appName = encodeURIComponent(window.location.hostname); if (appName == "") { appName = "local"; } var s = document.createElement("script"); s.type = "text/javascript"; s.async = true; var theUrl = baseUrl + 'serve/v1/coin/chart?fsym=XRP&tsym=USD'; s.src = theUrl + (theUrl.indexOf("?") >= 0 ? "&" : "?") + "app=" + appName; embedder.parentNode.appendChild(s); })(); var single_widget_subscription = single_widget_subscription || []; single_widget_subscription.push("5~CCCAGG~XRP~USD"); The post Crypto Lending Firm, Nexo Hit with a Class-Action for Causing over Million in XRP Liquidations first appeared on BitcoinExchangeGuide.Similar to Notcoin - TapSwap on Solana Airdrops In 2024
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