Nexo faces Suit to Get liquidating $5m in client Safety amid XRP delisting

Crypto lending platform Nexo was accused causing $5 million worth of client liquidations after suspending the use of XRP as collateral without any warning in December.
United States-based crypto lending platform Nexo is confronting a class-action litigation over suspension of XRP providers on Dec. 23, 2020. The complaint accuses Nexo of breaching its user agreement by suspending the use of XRP as loan collateral without notifying its customers ahead. The suspension followed the SEC’s legal actions from Ripple Labs for conducting unregistered securities supplies on December 22. Nexo allows users to borrow fiat money or stablecoins using over-collateralized loans that are supported by crypto assets. Should price fluctuations in the crypto markets induce loans to no longer meet the system’s demanded loan-to-value, or LTV, percentage, the complaint cites Nexo’s terms of service as stating that”Nexo will — after providing notice to the customer — sell the collateral to deliver the LTV ratio back in line” Jeong stated that Nexos reacted into the SEC’s announcement by suspending the use of XRP as collateral, to repay loans, and also for staking on Dec. 23. As a result, many users were left unable to encourage their loan positions, prompting wholesale liquidations across the platform.Further, the plaintiff said Nexo”unjustifiably” sold off clients’ XRP and pocketed the proceeds, stating:”Viewing the price of XRP thus drop appreciably, on December 23, Nexo suspended clients’ use of XRP to stake as collateral or cover down on loans also did so without giving notice of this suspension. Nexo failed because it did not wish to get left holding XRP at its substantially decreased value–not since Nexo believed the SEC’s announcement counseled from the sale or use of XRP. “According to this suit, Nexo’s suspension led to the liquidation of more than $5 million worth of its clients’ assets.¬† The plaintiff also stated that Nexo’s XRP liquidations contradicted the company’s claim it doesn’t have ownership rights of users’ collateral.Jeong is seeking restitution to its alleged losses incurred by the XRP suspension, together with an order announcing Nexo’s statutory rights:”Declaration concerning the parties’ statutory rights is required since the rights and duties at issue are central to the very operation and application of their Nexo Crypto Credit, also since Nexo’s public statements demonstrate that the parties have a fixed and genuine dispute over these obligations and rights ” Nexo is yet to comment on the accusations, but the platform lately filed a defamation lawsuit against its prior customer, Lance Johansen, over multiple negative reviews the defendant published on inspection platform Trustpilot in early 2021. In particular, Nexo is shooting at Johansen’s comments asserting the platform is run by an ex-felon, uses bot reports to disseminate fake news, also that it intentionally”robbed all XRP owners blind” via its suspension of this token.

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