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Investors Sue Crypto Lender Nexo for Blocking Accounts After $126M Withdrawal Attempts

Cointime Staff· 2 min read

Three fintech investors from the same family have sued Swiss-based cryptocurrency lender Nexo for blocking their accounts after they attempted to withdraw all of their assets worth £107 million ($126 million).

Nexo Sued for Blocking Users’ Accounts

According to a report from City A.M., the users — brothers Jason and Owen Morton and their cousin Shane Morton — filed a High Court lawsuit alleging that Nexo blocked their accounts and pressured them into selling their holdings at a discounted price.

In the documents accessed by the media, the investors said they were concerned about Nexo’s transparency and compliance with regulators, particularly the UK’s Financial Conduct Authority (FCA). They were also worried about the amount of all Nexo Tokens (NEXO) held by the company’s employees.

The Mortons claimed they initially informed Nexo about their concerns in December 2020 but received an unsatisfactory response.

Subsequently, they decided to withdraw their combined crypto assets worth $126 million from the exchange. In March 2021, they started liquidating their NEXO tokens in small portions to avoid a heavy impact on the market. They also had other crypto assets, including Bitcoin (BTC), Pax Gold (PAXG), and Stellar (XLM).

As soon as Nexo noticed the activity, the crypto lender allegedly imposed a $150,000 daily withdrawal limit on their accounts on March 22 without any notification or explanation.

By the next day, the exchange greyed out their withdrawal buttons, blocking them from withdrawing their assets. On that same day, Nexo disabled Shane and Owen from converting their NEXO tokens to other cryptocurrencies.

A 60% Discount Offer

Due to the restrictions imposed on their holdings, the Mortons reached out to the Nexo employee who managed their accounts, demanding an explanation.

As they conversed, the employee said the exchange froze their accounts to “support the price of Nexo Tokens.” He then offered the Mortons a deal, which entailed selling their NEXO tokens at a 60% discount at their market price as of then in exchange for lifting the restrictions.

The Mortons agreed to the deal and got paid $38.9 million in Tether (USDT) for over 38.7 NEXO tokens, which were worth $85.4 million in March, according to CoinMarketCap.

In the lawsuit, the investors alleged that Nexo breached its contract with them by imposing “bespoke” withdrawal limits on their accounts and intimidating them into selling their NEXO tokens at a price below the market.

An Opportunistic Claim: Nexo

In response to the allegations, Nexo said it “considers that the claim has been brought opportunistically, sometime after the events in question took place from 2020 through to March 2021. Nexo had considered the matter closed, and is disappointed to see it re-emerge.”(By William A. Frederick)

# Nexo

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