The decision by Crypto.com comes just within a month of BlockFi’s $100 million penalties for its lending products, as many speculate regulatory clampdown could be the potential reason behind the decision.
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Crypto.com is reportedly giving users from countries restricted from its loan program until March 15 to repay their crypto loans.
The firm updated the list of restricted countries to include the United States, the United Kingdom and 38 others. Users from European nations such as Germany, Switzerland and the U.K. have all shared emails from the company regarding the loan closure date. It‘s worth noting that some of these users who do not have crypto loans on the platform have also received the emails.
According to the new policy, if users fail to repay their loans by March 15, their collateral will be sold and loan positions will be closed by the exchange. Crypto.com didn‘t respond to Cointelegraph‘s requests for comments at the time of writing.
Related: Crypto lending firms on the hot seat: New regulations are coming?
The sudden policy change has left Crypto.com customers anguished and in disbelief, with many claiming that the exchange‘s recent splurge on advertisements and marketing has started to take a toll on its balance sheet. The exchange‘s aggressive marketing splurge over the past year has raised many eyebrows, given the company, unlike many other crypto unicorns, hasn‘t raised much capital from investors.
— XRPGLOBAL (@xrp_ninja) March 8, 2022
Crypto.com’s marketing budget, which includes millions being spent on celebrity endorsements, buying of arenas and much more, have been a topic of discussion on the internet for a long time. However, the sudden change in its lending policy has only made the theory more prominent.
Crypto lending products have been under regulatory scanner for over a year now, with several crypto firms getting a security violation notice from respective state regulators. Gemini and Celsius offered lending products that came under U.S. Securities and Exchange (SEC) investigation in January, while BlockFi was slapped with a $100 million penalty for offering unregistered crypto lending products in February.
Additional reporting by Brian Quarmby.