The California Department of Financial Protection and Innovation recently issued a fine to crypto lending service provider Nexo Capital, involving a penalty of $500,000. This case exposes a serious issue: some platforms still have obvious vulnerabilities in risk control and compliance processes.

According to the investigation by the California Department of Financial Protection and Innovation(DFPI), Nexo issued at least 5,456 consumer and commercial loans to California residents without a valid license. Even more concerning is that these loans were issued without any standard risk assessment—neither evaluating the borrower's repayment ability nor reviewing their existing debts, credit history, or financial situation.

"Crypto loans must also comply with the law." DFPI Commissioner KC Mohseni emphasized in a statement that the responsibility of lending institutions is to protect consumers, not to blindly expand their business. Nexo's lack of basic underwriting policies directly led to a significant increase in default risk.

These problematic loans span over four years—from July 2018 to November 2022. According to the penalty terms, Nexo must properly transfer all funds of California borrowers to Nexo Financial LLC, which holds a valid license, within 150 days.

This is not the first time Nexo has paid a price for compliance issues in the U.S. As early as February 2023, the company announced the closure of its Earn Interest product for U.S. users due to regulatory risks, and in the previous month, it agreed to pay a $45 million fine.