By Elizabeth Howcroft                                                            

UK-based crypto lender Nexo said on Monday it would phase out its US products and services over the coming months due to clashes with regulators.

“Our decision comes after more than 18 months of good-faith dialogue with US state and federal regulators which has come to a dead end,” Nexo said in a blog post on Monday.

Crypto lenders act like banks for the crypto world, offering customers interest on cryptocurrencies they deposit with the platform.

The firms grew rapidly during the COVID-19 pandemic, but as crypto markets slumped earlier this year various crypto lenders froze withdrawals, leaving customers with large losses. Major US-based lenders Celsius, Voyager Digital Ltd and BlockFi have all filed for bankruptcy this year.

Eight US state regulators charged Nexo in September for allegedly failing to register its Earn Interest Product.

California’s Department of Financial Protection and Innovation said Nexo’s interest-earning accounts promised an annual interest rate as high as 36 per cent. Nexo said that the 36 per cent interest was applicable only for one asset, and that it did not advertise the high rate.

Lawmakers around the world have stepped up calls for regulation of crypto firms following the collapse of major exchange FTX last month.

Nexo said it will continue to process customer withdrawals “in real-time” as it withdraws from the United States.

-Reporting by Elizabeth Howcroft in London; Editing by Tom Wilson and Matthew Lewis.