1. Are these companies breaking the law?
2. Are Nexo and others "tak[ing] advantage of unsuspecting investors"?
3. Does these companies think they're "above the law"?
4. Is the Martin Act protecting the investing public in this case?
Each of these is deserving of its own in-depth answer, but TLDRs are sufficient:
1. Yes, because securities law is written to be a catch all (both the Martin Act and the 1933/34 Securities Acts) where exceptions are drawn as to what is _not_ a security. While these accounts may act more like traditional "bank accounts", bank accounts are specifically excluded from securities law because they fall under a (stricter) regulatory regime.
2. No. The risk profiles on these products match that of Robhinhood, Wealthfront, or a Chase checking account (Genesis' custodial insurance policy beats the FDIC's $200k ceiling). Biggest issue is that you don't own your private keys but that's not unique here.
3. I don't think so, but they do know they're not in full compliance. This is a game of Natural Law (see point 4) and cat and mouse, and staying ahead of regulators is different than being "above" the law.
4. Stablecoin yield-accounts are one of the few liquid, low-risk options for beating inflation and likely the only one accessible for every-day people. If anything, they should be more pervasive in accordance with the principal that BlockFi, Nexo, etc. and their ilk are offering a social good even if it is outside of what they are _permitted_ to allow by law. It is US fiscal policy, brittle supply chains, and lagging regulatory regimes that are detrimental to the investing public here.