California regulators issue a $500,000 fine to a crypto lending platform, spotlighting license risk control issues again

[Crypto News] The California Department of Financial Protection and Innovation recently issued a fine of $500,000 to the crypto lending company Nexo Capital. The regulatory agency’s allegations are quite straightforward: the company issued loans to California residents on a large scale without a valid lending license.

Specifically, the issue spans a considerable period—from July 2018 to November 2022, during which Nexo issued at least 5,456 consumer and business loans. More seriously, the company often skipped basic risk assessment steps during the lending process, with little to no in-depth investigation into key financial information such as borrowers’ repayment ability, existing debts, and credit history.

This highlights a fundamental problem: operating without a license means lacking regulatory oversight, and the absence of oversight results in risk control being virtually nonexistent. Nexo is now required to complete rectification within 150 days, transferring all funds from California clients to its affiliated entity Nexo Financial LLC, which holds a California lending license.

This case further proves one point— in the crypto finance sector, compliance licenses and risk management frameworks are not just formalities but are core defenses that directly impact customer rights. No matter how innovative your product is, the cost of bypassing regulatory requirements is often much higher than expected.