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Is Nexo safe? Crypto Lender Withdraws $150 Million From MakerDAO

It is the unfortunate reality that every cryptocurrency lender is under scrutiny these days as the market is still reeling from the chaos caused by Celsius earlier this year.

Nexo has separated itself from the crowd to date. Last week, it even announced a stake in the federally chartered Summit National Bank. It has repeatedly stated that it will refrain from unsecured loans. It even launched a takeover bid for Celsius as the embattled lender spiraled into insolvency (even if there’s a chance it was just a publicity stunt).

But now there is additional concern after regulatory issues and some curious moves in the chain.


Eight states filed a cease and desist order against Nexo last week. It’s the same old story about whether the products on offer are securities. I won’t go into the ins and outs because I’m not a lawyer, but the threat of having to remove certain products from the US market can of course put a lot of pressure on Nexo.

In fact, regulators in Kentucky accused Nexo of being insolvent, declaring that without its own token — NEXO — the company would have “liabilities (that) exceed its assets.” For anyone with a short memory, that’s exactly what led Celsius before they suspended recordings and filed for bankruptcy.

With the Nexo token having an extremely low trading volume of 1% of its market cap, people don’t realize that when everything is turned upside down, Nexo’s ability to monetize its holdings is significantly less than one would believe on- paper. Hey the care.

Nexo moves money on the chain

The second part comes with a funny pullback on the chain that made people curious. A wallet labeled Nexo Wallet withdrew more than $150 million from MakerDAO yesterday.

Obviously, this worries many people, given the parallels with the Celsius situation. For what it’s worth, I’d be surprised if Nexo goes bankrupt during a period of relative calm in the market.

However, the fact that regulators have recently issued a shutdown order adds an extra layer to this. But then again, the issue of security-or-not-a-security has hardly been unpredictable – Nexo should have known, and probably did, that this was coming.

After the moves caused some controversy in the market, Nexo issued a statement clarifying that “this routine transaction made yesterday represents a loan repayment in accordance with the latest market dynamics and following the company’s standard treasury management.”

My take on this? I still believe Nexo is okay, but if I had money I would definitely be a little more nervous today than I was last week. As I said when Terra went down, the yield currently being offered for these products is simply not worth the risk. Most offer returns of around 4% on Bitcoin (Nexo’s base rate is 3%-4%) – are you really willing to risk it all?

It is also strange that Nexo did not warn the market in advance to allay any concerns as this too would have been obvious.

The smart risk-reward game at the moment is to postpone the revenue-generating products for now until we have a clearer picture. Because even though I think Nexo is okay and this is probably a lot of fuss over nothing – I’m on the list to discuss how well I think Nexo I run in relation to many other companies in the industry – we really can’t. for sure … and that says it all.

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