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Effective Date: October 5, 2025
InvestorJustice.org issues this advisory to highlight the regulatory and legal risks faced by investors when dealing with entities incorporated in the Cayman Islands.
This is for educational purposes only and does not allege wrongdoing by any specific entity.
Key Concerns
Corporate Structure Opacity
Many fintech and digital-asset firms use cross-jurisdictional structures to separate liabilities and responsibilities.
Example: Nexo AG (Switzerland) → Nexo Capital Inc. (Cayman) → downstream entities.
Some Terms of Service require disputes to be resolved via offshore entities, which limits oversight and accountability exposure.
Regulatory Vacuum
The Cayman Islands Monetary Authority (CIMA) focuses chiefly on firms serving Cayman residents.
Entities offering financial services to foreign clients often fall outside CIMA’s consumer-protection remit.
Retail investors frequently lack an administrative body for complaints or enforcement.
Limited Remedies Under Cayman Law
Cayman legislation does not provide statutory complaint mechanisms equivalent to those under the SEC, FINMA, or DFPI.
Investor recourse is generally limited to civil litigation in Cayman courts, which is expensive, procedurally complex, and inaccessible to many non-residents.
There is no statutory dispute-resolution regime analogous to consumer-finance or securities regulations found in more regulated jurisdictions.
Use Case: Nexo Capital Inc. (Cayman)
Nexo Capital Inc., registered in the Cayman Islands, has acted as the contractual counterparty for credit-line and yield products.
Because this entity operates offshore, many investors discovered no accessible regulator like FINMA or the SEC.
When liquidation events or disputes occurred, the jurisdictional positioning effectively insulated the entity from oversight, leaving investors with limited recourse.
Systemic Lesson
Offshore incorporation (e.g. Cayman, BVI) is legal and common in global finance.
But when such structures support retail credit, custody, or yield products, they often come with regulatory gaps and limited investor protection.
Investors should confirm the jurisdiction of their contractual counterparty and determine which regulator (if any) governs it.
Related Legal Primer
For deeper context on how “APR disclosures” and credit-loan alignment issues work under Swiss/consumer law, see our Legal Primer: Removing APR.
This primer examines how APR-based marketing can conflict with liquidation or margin-style loan structures and regulatory expectations.
Advisory Conclusion
Based on existing documents and structural norms, InvestorJustice.org cautions investors to exercise great care when engaging with Cayman-registered entities offering financial products under opaque or cross-border liability frameworks.
If you have been impacted by such an entity, please consider sharing your story — helping expose patterns and drive regulatory awareness.
Accountability starts with exposure.
Disclaimer: This advisory is published in the public interest. It does not constitute financial or legal advice. Investors should consult qualified professionals before making financial decisions.
