Crypto lender Nexo has been accused of liquidating around $ 5 million worth of XRP collateral
Nexo, a UK crypto lending platform, faces a lawsuit for suspending its use of XRP as collateral and causing $ 5 million in customer liquidations late last year. Lead plaintiff Junhan Jeong, who filed the class action lawsuit on behalf of other XRP users, argues that the platform did so without warning, causing tremendous harm to users.
Jeong filed the complaint late last week, saying the platform violated its user agreement.
One section of the filing read: “The plaintiff is seeking compensation for the nationwide damage resulting from the deliberate and unjustified suspension of a critical repayment option on its platform for the use of crypto assets to borrow cash by Nexo on December 23, 2020 and the resulting liquidation the collateral of hundreds of Nexo customers. cause well over 5 million US dollars in damage ”.
Nexo reportedly took the approach to avoid losses due to the Ripple SEC’s legal troubles. The filing adds that Nexo held the proceeds after unjustified liquidation of customer collateral.
“With the price of XRP falling significantly on December 23, Nexo suspended customer use of XRP as collateral or loan repayment without giving notice of the suspension. Nexo did so because it didn’t want XRP to be held at its significantly declining value – not because Nexo believed the SEC’s announcement was against the use or sale of XRP. “
According to Jeong, users who wanted to use Ripple’s native tokens as collateral to maintain their loans were prohibited from doing so.
“Nexo’s suspension of XRP payments and liquidation of these customers’ collateral was therefore illegal. These customers are entitled to reclaim the value of their XRP if Nexo has suspended the use and value of their liquidated collateral at the time of the breach (minus the outstanding collateral loan amounts for such collateral) … ”
Several crypto exchanges that supported XRP, as well as financial institutions affiliated with Ripple, split from the blockchain firm when it was sued by the SEC. Nexo was among the platforms that did this, albeit in an “illegal” manner according to the filing. The company’s legal team is reported to have tried to come to an amicable level through its attorney, but the move has not borne fruit.