Crypto lending platform Nexo has reached an agreement with US regulators over allegations of an unregistered sale of securities. The company will pay $45 million in fines as part of the claims settlement.
Nexo has reached a final landmark resolution with the US Securities and Exchange Commission (SEC), the North American Securities Administrators Association (NASAA), consisting of all 50 US States & 3 territories and the Attorney General of New York.🧵https://t.co/modjbPsOdV
— Nexo (@nexo) January 19, 2023
The U.S. Securities and Exchange Commission (SEC), as well as the regulatory agencies of several states, have considered the Earn Interest Product (EIP) crypto-currency interest product as securities.
According to the SEC, the company failed to register the offering under applicable law and circumvented disclosure requirements.
Today we charged Nexo Capital Inc. with failing to register the offer and sale of its retail crypto asset lending product, the Earn Interest Product (EIP). To settle charges, Nexo agreed to pay $22.5 million and cease its unregistered offer and sale of the EIP to US investors.
— US Securities and Exchange Commission (@SECGov) January 19, 2023
Under the agreements reached with regulators, Nexo will pay a fine of $22.5 million to the Commission, a similar amount in favor of state regulators. Cryptocurrency company will stop offering EIP to US investors.
The SEC noted that the settlement of claims against Nexo took into account the cooperation of the company and its preemptive decision to leave the US market.
In February 2022, the company’s rival platform BlockFi settled similar charges from the SEC and regional agencies, agreeing to pay $100 million in fines.
Nexo’s Bulgarian offices were raided in January as part of an investigation into potential violations of anti-money laundering regulations. The company faced a significant outflow of funds.