California’s Department of Financial Protection and Innovation (DFPI) fined Nexo Capital Inc. $500,000 after concluding the lender made unlicensed crypto-backed loans to California residents and skipped basic repayment checks. The enforcement action adds near-term regulatory friction to Nexo’s stated ambition to re-enter the U.S. market.
The DFPI said that between July 2018 and November 2022, Nexo facilitated roughly 5,456 crypto-backed loans to California residents without holding the required lending license. Regulators also pointed to marketing that emphasized “no credit checks,” and said Nexo did not assess credit history, existing debt, or ability to repay—conditions the agency characterized as consumer-risky.
The DFPI continues to hold companies accountable for breaking the law.
Nexo Capital Inc. (Nexo) must pay $500,000 for breaking California financial laws, including offering crypto-backed loans and services without a valid license.
Read more: https://t.co/X3f5Hh9MSu. pic.twitter.com/nqeu6O1fEB
— CA Department of Financial Protection & Innovation (@CaliforniaDFPI) January 14, 2026
What the settlement requires
The settlement pairs a financial penalty with operational remediation, and the DFPI framed the case as a reminder that “crypto-backed loans are no exception” to consumer lending rules. Commissioner KC Mohseni said lenders must follow the law and avoid making risky loans that endanger consumers.
Beyond the $500,000 fine, Nexo must transfer all funds belonging to California residents to a licensed U.S. affiliate within 150 days and implement IP-based geoblocking to prevent Californians from accessing unlicensed services. In practical terms, the order forces activity into a licensed perimeter and raises the compliance bar for any California-facing relaunch.
Nexo’s response and market implications
Nexo said the resolution addresses “historical licensing and compliance matters” and does not reflect its current operations or governance, adding that it remains in dialogue with regulators and has not resumed U.S. services.
The action also lands against a backdrop of prior scrutiny: Nexo previously settled with the SEC and state regulators in January 2023 for $45 million over an unregistered interest-bearing product and exited the U.S. market in late 2022. Industry commentary in the same reporting argued that over-collateralization alone does not substitute for underwriting when consumer-protection frameworks apply, and Komodo Platform CTO Kadan Stadelmann described the lack of ability-to-repay checks as evidence of “systemic compliance shortfalls.”
For counterparties and market operators, the case is a clean illustration of how enforcement can translate into operational disruption—forced fund transfers, access restrictions, and higher compliance overhead. The near-term KPI is execution: whether Nexo completes the 150-day transfer requirement and establishes a licensed affiliate structure robust enough to support a U.S. return without recurring regulatory escalation.
