Joe White says he wired $1 million of his life savings into a cryptocurrency platform called Nexo in 2021, watched the balance swell to as much as $6 million by that November, and then watched it collapse to almost nothing. Now the San Diego man says the money is gone, and he has an active complaint filed with California's financial watchdog agency trying to figure out what happened to it.
White transferred his crypto investments to Nexo in 2021 after learning about the platform on Reddit, he says, with a coworker later introducing him to the company more directly. As reported by 10News, White worked at more than 10 startup companies before putting everything into what Nexo marketed as a way to grow wealth through a product it called a crypto credit line, which let borrowers take loans backed by their cryptocurrency instead of selling it outright. White occasionally withdrew money for normal living expenses, he told the station, but says he ultimately lost nearly all of what he invested by 2023.
White says he has since reported his experience to California's Department of Financial Protection and Innovation, the district attorney's office, and the Federal Trade Commission. He says he cannot access his own financial records from Nexo, and that a bank wire transfer for $1 million to the company is among the documentation he has been able to produce on his own.
State Regulators Found Unlicensed Lending to Thousands
White's timing lines up with what California regulators say they found when they examined Nexo's business practices. The DFPI determined that Nexo Capital violated state law by offering crypto-backed loans and services without a valid license, according to a DFPI press release. The agency fined the Cayman Islands-based firm $500,000 in January 2026 for originating loans with 5,456 California residents between 2018 and 2022 without a California Financing Law license and without assessing those borrowers' credit histories or capacity to repay.
Under the consent order, Nexo was ordered to stop its unlicensed operations in the state and transfer any remaining California resident accounts and funds to its licensed U.S. affiliate, Nexo Financial LLC, within 150 days, per a bulletin the agency distributed. White has said the DFPI order describes what happened to his own account. Nexo, for its part, said in a statement that it neither admits nor denies the findings, per the terms of the consent order, and that it is keeping its California license.
A company spokesperson told 10News that the consent order concerned legacy issues from an earlier phase of the business in 2022, adding that detailed risk disclosures are presented across its product offerings and client-facing materials. Nexo also said the credit line product is not currently available in California, and that users can repay the credit line whenever they want, in any amount and at their own pace. The company says it has processed more than $430 billion since it began operating in 2018.
A Familiar Pattern of Regulatory Trouble
This isn't Nexo's first brush with regulators. In January 2023, the Securities and Exchange Commission and state securities regulators under the North American Securities Administrators Association reached a $45 million settlement with Nexo over allegations that its Earn Interest Product was an unregistered security, split evenly between $22.5 million in SEC penalties and $22.5 million distributed to state regulators across 53 U.S. jurisdictions, according to the SEC. The SEC took action against the company after it failed to register that product in 2023, and Nexo agreed to pay the $22.5 million penalty as part of the settlement.
State securities regulators found that Nexo had promoted yields as high as 36% on its interest-bearing crypto accounts while retaining total discretion over how customer deposits were invested or rehypothecated to generate revenue, according to NASAA. After deciding to phase out its U.S. operations in December 2022, the company re-entered the American market in March 2026 through what Cointelegraph described as a partner-delivered compliance model relying on regulated U.S. intermediaries such as Bakkt.
How the Money Can Disappear So Fast
The mechanics behind losses like White's trace back to how crypto-backed credit lines work. Nexo Capital could automatically liquidate crypto collateral if its market value dropped below a certain level, and crypto-backed credit lines across the industry are built to trigger margin calls and forced collateral sell-offs once loan-to-value thresholds are breached, according to research from crypto lender Ledn. Once those thresholds are crossed, pledged digital assets get sold off without any input from the borrower.
Federal regulators have flagged these risks for years. The U.S. Department of Labor's Employee Benefits Security Administration issued guidance in April 2022 warning 401(k) plan fiduciaries to exercise extreme care before offering cryptocurrency options, citing severe risks of volatility, fraud, and total loss. Separately, the Consumer Financial Protection Bureau received more than 8,300 crypto-related consumer complaints between October 2018 and September 2022, with roughly 40% alleging fraud or scams and 16% citing frozen accounts or unavailable assets.
Ashley Russo, a San Diego wealth management advisor, said cryptocurrency is associated with volatility as a newer asset class and that it can be uncertain. She advised that people should proceed with caution when using cryptocurrency, especially for retirement savings. For White, that caution came too late. “Right now I have nothing besides my family,” he said, describing how he put all his retirement money into a crypto platform only to watch it disappear.
California Tightens the Rules Going Forward
California has moved to close some of the regulatory gaps that let Nexo operate for years without a lending license. Effective July 1, 2026, the state's Digital Financial Assets Law requires non-bank entities engaging in digital financial asset business with California residents to be licensed by the DFPI or have a pending application on file, according to the DFPI. In June 2026, Governor Gavin Newsom established a state Tech Fraud Task Force co-led by the DFPI to intensify enforcement against technology-driven financial fraud and digital asset misconduct, according to a summary from law firm Morrison Foerster.
For White, none of those new safeguards change what already happened to his account. His complaint with the DFPI remains active, and he says he still cannot get his own financial records from the company he trusted with his life savings.
