The California Department of Financial Regulation recently issued a fine of $500,000 to the crypto lending platform Nexo Capital. The reason? During the period from July 2018 to November 2022, the platform issued approximately 5,456 loans to California users but did not obtain a valid business license at all.

More seriously, Nexo basically did no due diligence when lending. The key risk control factors such as the borrower's income, liabilities, and credit status were not properly assessed by the platform. In other words, it was operating in a black box, approving loans to anyone who applied.

What does this case illustrate? California financial regulators are taking the emerging field of crypto lending seriously. Whether you are a traditional financial institution or a blockchain platform, compliance licenses and risk management are non-negotiable bottom lines. For crypto financial service providers aiming to operate legally in the United States, this penalty serves as a strong warning: regulation is not just for show, real fines are imminent.