Coleman v. Nexo Capital Inc., No. 1:25-cv-00240-MPB-MG (S.D. Ind. Mar. 31, 2026)

Case details
Full caption
Elbert Coleman, III; Elbert Coleman, IV v. Nexo Capital Inc.
Country
United States
Jurisdiction
Federal
Court
Southern District of Indiana (S.D. IND)
Decided
Mar. 31, 2026
ELBERT COLEMAN, III, ELBERT COLEMAN, IV, Plaintiffs, v...., Slip Copy (2026) © 2026 Thomson Reuters. No claim to original U.S. Government Works.12026 WL 994492Only the Westlaw citation is currently available.United States District Court, S.D.Indiana, Indianapolis Division,INDIANAPOLIS DIVISION.ELBERT COLEMAN, III, ELBERTCOLEMAN, IV, Plaintiffs,v.NEXO CAPITAL INC. Support@Nexo.com, Defendant.No. 1:25-cv-00240-MPB-MG|Filed 03/31/2026Editor's Note: This decision contains discussion of citationreferences that are incorrect or do not actually exist. Theseinvalid citations appeared in the original court opinion andhave been preserved as written since they are part of theofficial record. Any links to these invalid citations have beenremoved.Attorneys and Law FirmsElbert Coleman III, Indianapolis, IN, Pro Se.Elbert Coleman IV, Indianapolis, IN, Pro Se.Ian Scott Shelton, Baker & McKenzie LLP, Houston, TX, forDefendant.ORDER GRANTING DEFENDANT'SMOTION FOR SUMMARY JUDGMENTMatthew P. Brookman, Judge United States District CourtSouthern District of Indiana*1 Plaintiffs Elbert Coleman III and IV sued DefendantNexo Capital Inc. in connection with their use of Defendant'scryptocurrency platform. (Docket Nos. 1; 8; 10). Afterscreening Plaintiffs’ complaints, a breach of contract claimremained. (Docket No. 11 at ECF p. 7). Defendant moved forsummary judgment on the breach of contract claim. For thefollowing reasons, Defendant's Motion, (Docket No. 104), isGRANTED.I. BackgroundA. Local Rule NoncomplianceAs an initial matter, the Court notes the deficiencies inPlaintiffs’ summary judgment briefing. Defendant's Brief inSupport properly sets forth a “Statement of Material FactsNot in Dispute,” and includes citations to record evidencesupporting these factual assertions. (See Docket No. 106 atECF pp. 17–18). As the non-movant, Plaintiffs were requiredby local rules to include a section labeled “Statement ofMaterial Facts in Dispute” in their response brief. S.D. Ind.L.R. 56-1(b). No such section exists. (See Docket No. 107at ECF pp. 1–10). Moreover, Plaintiffs do not “support eachfact [they] assert[ ] in a brief with a citation to a discoveryresponse, a deposition, an affidavit, or other admissibleevidence.” S.D. Ind. L.R. 56-1(e). Indeed, Plaintiffs fail tocite the record in support for any of their assertions in thebrief and instead rely on various “notices” filed with the Courtover the course of the past year. (See e.g., Docket Nos. 54;57; 108; 109; 112; 113; 114; 115). Plaintiffs’ practice doesnot comply with the local rules, which “require that assertionsof fact be supported by specific citations.” Hinterberger v.City of Indianapolis, No. 1:16-cv-1341, 2019 WL 1439159,at *3 (S.D. Ind. Mar. 30, 2019) (citation modified). A failureto comply with the local rules can result in an admission of theDefendant's asserted facts. Smith v. Lamz, 321 F.3d 680, 683(7th Cir. 2003). While the Court will not consider Plaintiffs’deficiencies determinative of this case on their own, Plaintiffsare cautioned to comply with the local rules in future filings.B. Relevant FactsDefendant Nexo Capital Inc. operated a cryptocurrencyplatform that, at the time of the events relevant to this case,offered two products. (Docket No. 104-25 at ECF p. 2).The first was a “Credit Line Product” that allowed usersto take out “cryptocurrency credit lines ... secured by thecryptocurrency collateral in their Nexo accounts.” (Id. at ECPpp. 2–3). Defendant also offered an “Earn Interest Product”that generated interest on “unencumbered cryptocurrencydeposits[.]” (Id.). Plaintiff Elbert Coleman III opened hisaccount on May 31, 2020, (Docket No. 104-4 at ECF p. 3), andPlaintiff Elbert Coleman IV opened his account on August 8,2020, (Docket No. 104-6 at ECF p. 3). Both Plaintiffs usedthe Credit Line Product feature. (Docket No. 104-25 at ECFpp. 6–7). Coleman III took out a credit line in the principalamount of approximately $89,000, (Docket No. 104-17 atECF p. 12), while Coleman IV had a credit line of around$105,000, (id. at ECF p. 14).
ELBERT COLEMAN, III, ELBERT COLEMAN, IV, Plaintiffs, v...., Slip Copy (2026) © 2026 Thomson Reuters. No claim to original U.S. Government Works.21. Suspension of XRP*2 By signing up for their accounts, Plaintiffs navigatedthrough a sign-up page notifying them that “[b]y signingup you agree with our T&C and Privacy Policy.” (DocketNos. 104-1 at ECF p. 2; 104-25 at ECF p. 5). The Termsand Conditions and Privacy Policy were hyperlinked, andthe T&C link included the “Nexo Crypto Credit Terms” thatgoverned use of Defendant's Credit Line Program. (DocketNo. 104-25 at ECF p. 6). Relevant to this action, the termsdefined “Digital Assets” as “any digital assets (such ascryptocurrencies, stablecoins and tokenized assets), acceptedby Nexo,” (Docket No. 104-3 at ECF p. 2), and “Nexo CryptoCredit” as “any Digital Assets credit facility granted by Nexoand the total amount of the credit due by the Client to Nexoat any time until its full repayment, including the principal,the Interest and any fees due to Nexo,” (id.). Under the terms,Defendant reserved the right, “without liability” to its users,to “suspend the provision of the Nexo Crypto Credit or ofall or part of the other Nexo services” as well as “change,update, remove, cancel, suspend, disable or discontinue anyfeatures ... of the Nexo Crypto Credit.” (Id. at ECF p. 3).On December 22, 2020, the Securities and ExchangeCommission (“SEC”) filed an enforcement action againstRipple Labs Inc., a company that sold a digital asset calledXRP, for violating rules against the sale of unregisteredsecurities. (Docket No. 104-8 at ECF p. 2). A week later,Defendant suspended XRP as a repayment option for theCredit Line Product. (Docket No. 104-9 at ECF p. 2).Defendant's customers could still use fiat currencies, such aseuros and U.S. dollars, for loan repayments, in addition toother cryptocurrencies and stablecoins. (Id.).2. LiquidationThe Credit Line Product granted its customers “Nexo CryptoCredit in Digital Assets” if the customer provided adequate“Digital Assets as collateral[.]” (Docket No. 104-3 at ECF p.3). To sustain the credit line, the collateral needed to maintaina sufficient “loan-to-value-ratio[.]” (Id.). That ratio is a“measurement of the balance of the loan relative to the valueof the collateral asset.” (Docket No. 104-11 at ECF p. 2). If thevalue of the collateral decreases, the loan-to-value-ratio goesup, and if the ratio exceeds “certain thresholds,” Defendantwould request the customer to provide additional collateral.(Docket No. 104-3 at ECF p. 4). Defendant also reserved theright to, after notification, “liquidate” the collateral to recoverpart of the loan balance. (Id.; Docket No. 104-11 at ECF p.2). Defendant set its liquidation threshold at 83.3%. (DocketNo. 104-11 at ECF p. 2).Both of Plaintiffs’ accounts were liquidated when their loan-to-value-ratios exceeded Defendant's threshold. (Docket No.104-25 at ECF pp. 8–13). Defendant liquidated some ofColeman III's collateral on June 21 and 22, 2021. (Id. atECF p. 8; Docket No. 104-5 at ECF p. 13). He receivedtext messages prior to the liquidation alerting him that thevalue of his collateral had decreased. (See Docket No. 104-16at ECF pp. 11, 13). Defendant liquidated more of ColemanIII's digital assets between May 8 and 12, 2022, because hisaccount exceeded the 83.3% threshold. (Docket No. 104-25at ECF p. 10). Again, Coleman III received warning messagesin advance of the liquidation. (See Docket No. 104-16 at ECFpp. 5, 7, 9). All told, Defendant liquidated around $96,000of Coleman III's digital assets. (Docket No. 104-17 at ECFpp. 12–13). Defendant also liquidated some of Coleman IV'sdigital assets on May 23, 2021, and June 21 and 22, 2021.(Docket No. 104-25 at ECF p. 12). The two liquidationstotaled over $95,000. (Docket No. 104-17 at ECF p. 14).Coleman IV admitted to receiving “at least one notification”before both liquidation events. (Docket No. 104-19 at ECF p.17).II. Legal StandardSummary judgment is proper “if the movant shows that thereis no genuine dispute as to any material fact and the movantis entitled to judgment as a matter of law.” Fed. R. Civ.P. 56(a). “A dispute about a material fact is genuine ‘ifthe evidence is such that a reasonable jury could return averdict for the nonmoving party.’ ” Jaranowski v. Ind. HarborBelt R.R. Co., 72 F.4th 744, 749 (7th Cir. 2023) (quotingAnderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).In reviewing summary judgment motions, this Court mustview the evidence and draw all reasonable inferences in thelight most favorable to the nonmoving party. McDonald v.Hardy, 821 F.3d 882, 888 (7th Cir. 2016). Yet inferencessupported “by only speculation or conjecture will not defeata summary judgment motion.” Dorsey v. Morgan Stanley,507 F.3d 624, 627 (7th Cir. 2007). Because courts must not“scour the record in search of evidence to defeat a motionfor summary judgment,” the nonmoving party has the dutyand “responsibility of identifying the evidence upon which[it] relies.” Harney v. Speedway SuperAmerica, LLC, 526 F.3d1099, 1104 (7th Cir. 2008).
ELBERT COLEMAN, III, ELBERT COLEMAN, IV, Plaintiffs, v...., Slip Copy (2026) © 2026 Thomson Reuters. No claim to original U.S. Government Works.3III. Discussion*3 Plaintiffs’ breach of contract claim focuses on twoactions taken by Defendant. First, they allege that Defendantbreached the terms of the Credit Line Product by suspendingthe use of XRP as a repayment option. Second, they allegethat their accounts were liquidated in a manner inconsistentwith the terms and conditions. Defendant counters that therewas no breach in either event because the terms allowed forthe suspension of XRP, and because Plaintiffs received noticeof their liquidations. Defendant is correct; Plaintiffs’ theoriesare unsupported by law or fact.A breach of contract claim requires the existence of a contract,breach, and damages. Murat Temple Ass'n v. Live NationWorldwide, Inc., 953 N.E.2d 1125, 1128–29 (Ind. Ct. App.2011). Defendant argues that the relevant contract is the“Nexo Crypto Credit Terms” that Plaintiffs agreed to whensigning up for their accounts. This type of contract, commonlycalled a clickwrap agreement, is enforceable if “the partyclicking it had reasonable notice of and manifested assentto the agreement.” Jallali v. Nat'l Bd. of Osteopathic Med.Examiners, Inc., 908 N.E.2d 1168, 1173 (Ind. Ct. App. 2009).There is no indication that Plaintiffs lacked notice of theterms or did not manifest their assent to them—they werehyperlinked on the sign-up page and by signing up, Plaintiffsagreed “with our T&C and Privacy Policy.” (Docket Nos.104-1 at ECF p. 2; 104-25 at ECF p. 5); see Merchants Bankof Ind. v. Curby, No. 1:21-cv-2669, 2022 WL 16658130, at *3(S.D. Ind. Nov. 3, 2022) (finding a clickwrap contract formedby opening an account enforceable).With the contract established, Defendant turns to breach. Itargues that, as to the suspension of XRP as a repaymentoption, the Credit Terms expressly allowed for modificationof repayment options. Under the contract, Defendant reservedthe right “without liability” to its users, to “suspend theprovision of the Nexo Crypto Credit or of all or part of theother Nexo services” as well as “change, update, remove,cancel, suspend, disable or discontinue any features ... ofthe Nexo Crypto Credit.” (Docket No. 104-3 at ECF p. 3).Thus, Defendant did not breach the contract by suspendingthe use of XRP as a repayment option. The Credit Termsthat Plaintiffs agreed to be bound by contemplated such asituation.1Plaintiffs’ second breach of contract theory fares no better.They argue that Defendant liquidated their accounts “withoutnotice” and in violation of the Credit Terms. (Docket No.10 at ECF p. 6). If this were true, there would certainly bea breach, as the Credit Terms state that liquidation will nothappen without prior notice. (Docket No. 104-3 at ECF p. 4).But the undisputed facts show that Plaintiffs did receive noticeprior to liquidation. Coleman III received text messages,(see Docket No. 104-16 at ECF pp. 5, 7, 9, 11, 13), andColeman IV admitted to receiving messages in advance of anyliquidation, (Docket No. 104-19 at ECF p. 17). As such, thereis no genuine issue of material fact that Plaintiffs receivednotice prior to liquidation. Their breach of contract claim failsfor want of breach.Plaintiffs oppose Defendant's summary judgment motion onthe grounds that the Credit Terms are void because Defendantitself violated SEC rules by selling unregistered securities.There are two problems with this line of argument. First, theSEC's investigation into Defendant relates to its Earn InterestProduct, not the Credit Line Product at issue in this case.Thus, any SEC action would have no legal consequence asto the validity of the Credit Line Product or its governingterms. Second, to the extent that Plaintiff believes the contractis void, there would be no contract.2 But the existence ofa contract is an element of a breach of contract claim, soPlaintiffs claim would fail without a contract to rely on. MuratTemple Ass'n, 953 N.E.2d at 1128–29. And on a more generalnote, Plaintiffs’ Brief in Opposition focuses on the violationof the Securities Act, a claim that this Court has dismissedon at least two separate occasions. (See Docket Nos. 11 atECF pp. 5–6; 117 at ECF pp. 8–10). The only claim that madeit past screening was for breach of contract, and Defendantpresented evidence that clearly establishes its entitlement tosummary judgment.IV. Conclusion*4 Defendant's Motion for Summary Judgment, (DocketNo. 104), is GRANTED. Final judgment will issue byseparate entry.IT IS SO ORDERED.Distribution:ELBERT COLEMAN, IIIPO Box 681546Indianapolis, IN 46268
ELBERT COLEMAN, III, ELBERT COLEMAN, IV, Plaintiffs, v...., Slip Copy (2026) © 2026 Thomson Reuters. No claim to original U.S. Government Works.4ELBERT COLEMAN, IVPO Box 681546Indianapolis, IN 46268Ian Scott SheltonBaker & McKenzie LLPian.shelton@bakermckenzie.comAll CitationsSlip Copy, 2026 WL 994492Footnotes1Defendant also argues that, to the extent “Plaintiffs rely on an implied covenant theory to save their breachof contract claim,” it should still fail. (Docket No. 106 at ECF p. 14). But Plaintiffs do not raise this theory inopposing Defendant's summary judgment motion, so the Court need not address it.2In support of their argument that the contract is void, Plaintiffs cite “Indiana Code § 23-2-1-2” and “Kramerv. Trans-Lux Corp., 24 F.3d 1001 (7th Cir. 1994)” for the proposition that transactions involving unregisteredsecurities are void. (Docket No. 107 at ECF p. 3). These citations are inaccurate. A search of the IndianaCode statute reveals that it has been repealed, and no such case exists at the Seventh Circuit, thoughthere is one with the same name from the District of Connecticut. Kramer v. Trans-Lux Corp., No. 3:11-cv-1424, 2012 WL 4444820 (D. Conn. Sept. 25, 2012). It is unclear whether Plaintiffs’ citations are fabricatedor erroneously cited. Regardless, all parties, including those proceeding pro se, must conduct a reasonableinquiry to determine that all factual and legal allegations contained in court filings are supported as requiredby Federal Rule of Civil Procedure 11. A party's failure to adhere to this rule authorizes sanctions, includingthe dismissal of the case. See Fed. R. Civ. P. 11(c). Although sanctions are not imposed here in light of thepresent Motion's disposition, the Court cautions all parties to adhere to this rule, especially where artificialintelligence (“AI”) may have been used to assist parties in preparing filings. See Jones v. Kankakee Cnty.Sheriff's Dep't, No. 25-1251, 2026 WL 157661, at *3 (7th Cir. Jan. 21, 2026) (“As pro se litigants employ AIto assist with court filings, a basic reminder seems wise. Accuracy and honesty matter.”).End of Document© 2026 Thomson Reuters. No claim to original U.S. Government Works.
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