By Aparajita Pathak
On January 14, 2026, the California Department of Financial Protection and Innovation (DPFI) fined Nexo Capital, a crypto lending platform, $500,000 in penalties for lending to California residents without a valid license. DFPI’s actions demonstrate an effort to hold entities accountable for compliance with state law and to keep lending practices fair for Californians. The parties entered into a consent order, under which they settled that Nexo Capital must stop violating the California Financing Law and the California Financial Protection Law, and pay DFPI $500,000 in incremental installments over the next six months.
On approximately July 26, 2018, Nexo Capital began offering California residents crypto and real-money loans backed by cryptocurrency collateral. Under the Nexo Capital loan agreement, Nexo Capital would have complete ownership over the collateral for accounts with unpaid loan balances. The company advertised its relaxed credit check standards on its public website, making it easy for consumers to receive loans without an inquiry into their ability to repay.
Nexo Capital operated without a license from the DFPI commissioner from July 26, 2018, until November 22, 2022, in direct violation of California Financial Code section 22100, which requires lenders to obtain a license from the commissioner. Furthermore, DFPI discovered that Nexo Capital did not implement proper standards and policies for 5,456 California residents because it did not consider the borrowers’ capacity to repay the loans, as required by Section 1452 of Title 10 of the California Code of Regulations. Finally, Nexo Capital’s services are regulated by the California Financial Protection law because they offer a financial product; however, they engaged in a deceptive business practice by operating without authorization to offer this lending service in California.
Nexo Capital did not admit or deny DFPI’s findings. However, Nexo Capital and DFPI reached a resolution to promote judicial economy and limit litigation costs. Nexo Capital has a different but related group, Nexo Financial LLC, which is appropriately licensed under the California Financing Law. Under the consent order, the current consumer funds must be transferred within 120 days to Nexo Financial LLC since they meet the licensing requirements, and they must notify consumers via text, email, and social media platforms of this transfer.