Nexus, a leading token exchange and lending platform, has publicly commented on the issues surrounding the SEC's case against Ripple, and its decision to suspend XRP positions in its exchange, as well as temporary credit lines, and repayments.
Like many companies in the cryptocurrency space, Nexo chose to ditch XRP from its product offering in late 2020.
The Securities and Exchange Commission (SEC), the US regulatory body responsible for financial markets, filed a lawsuit against Ripple Labs in 2020, which temporarily brought the price of XRP down.
Today, the situation looks different and second Nexus, the company was attacked for its decision to abandon XRP.
In a recent blog post, the exchange went on record and stated the following
Nexus has been subjected to aggressive defamation and blackmail attacks through various media and communication channels by several former clients liquidated following the December 2020 XRP collapse
As the attempts to settle out of court were not accepted by the individuals in question, Nexo is taking legal action
The company says any further attacks on its reputation, including unfounded lawsuits, will be dealt with with the same severity and through the applicable legal tools and mechanisms.
The SEC created a situation where companies that wanted to avoid problems in the Western world had to consider the reaction they might face if they continued to deal with XRP and Nexus took the safe path, and worked to follow a regulatory environment.
Nexo was not alone
When the SEC filed a lawsuit against Ripple in late 2020, many large companies couldn't get hold of XRP fast enough.
As the US has given little solid indication of what cryptocurrencies actually are from a regulatory standpoint, outside of taxable assets, so we shouldn't be surprised that when there is a lawsuit - companies will pay attention.
As Nexo said in the same post -
"To comply with applicable laws and regulations in the jurisdictions in which Nexo operates, we are required to review all events in the blockchain space that may adversely affect our regulatory status and business operations, and expose the company to significant risks, including, but not only that, any administrative and legal proceedings involving the digital assets supported by Nexo ".
This sentiment is undoubtedly true, and any business has a responsibility first of all to itself and to whoever owns it.
While there were no questionable effects among the company's clients, the exchange itself was not negatively impacted by its decision to abandon XRP trading in terms of actions taken against it by US regulators.
A difficult situation
As a hybrid entity offering escrow cryptocurrency credit, Nexo and its clients are subject to a number of risks. Late last year, the Ripple combination showed how quickly these risks can manifest.
Nexus He declares:
“The liquidations that are followed by users who have failed to repay their lines of credit or post additional collateral when the value of their XRP collateral has decreased are of a different nature. Settlements are a procedure envisaged by the CGT and are automatically activated by Nexo if the LTV rises above the maximum permitted threshold of 83,3%. While, according to the CGT, Nexo actually liquidates collateral support lines of credit from their accounts when that crypto-credit is pending, when liquidations occur, Nexo is disposing of its digital assets rather than rendering services to its customers, such as this is the case with Nexo's standard redemption and exchange service ”.
As the cryptocurrency ecosystem evolves, these types of situations will always arise.
Losses happen, and when a major token like XRP can be hit with a lawsuit, the damage to investors can be enormous.
There is no doubt that many people who were on the buy side of the XRP market, or who needed it to hold value as a form of collateral, were severely hurt financially when the price dropped in late 2020.
It's virtually impossible for XRP's late 2020 move to be the latest big move in the cryptocurrency markets or a major token.
Consider your risks accordingly.
