The crypto lender, which has been in the spotlight since the beginning of the year due to its difficulties, has now settled with the US Securities and Exchange Commission (SEC). According to the agreement, Nexo will terminate the platform’s problematic crypto-lending product called “Earn Interest”. In addition, he is forced to pay a total of $45 million in fines.
In the settlement with the Securities and Exchange Commission, Nexo agreed to stop offering the interest program and pay a $22.5 million penalty — plus another $22.5 million to settle with state regulators.
Nexo Capital has had a tough week. On Sunday, Bulgarian authorities said they had evidence that Nexo customers use the platform for illegal activities, including money laundering, tax crimes and the financing of terrorist activities. The claims are denied by the crypto lender.
Nexo has reached a final landmark resolution with the U.S. Securities and Exchange Commission (SEC), the North American Securities Administrators Association (NASAA), consisting of all 50 U.S. States & 3 territories and the Attorney General of New York.????https://t.co/modjbPsOdV
— Nexus (@Nexus) January 19, 2023
The crypto lender forgot to register with the SEC
Adding to Nexo’s headache is that the SEC accused the crypto-lending company of selling unregistered securities on Thursday. According to the Securities and Exchange Commission, the company did not register with the SEC before offering its crypto-lending product, “Earn Interest”.
In its SEC filing, it claims that the offering and sale of the Nexo “Earn Interest” product was not exempt from SEC registration, meaning that Nexo should have registered the offer and sale, but failed to do so. The paragraph to this effect is SEC on the official site:
According to the SEC order, Nexo began offering and selling EIP in the United States in or around June 2020. The EIP [Earn Interest Product] allowed US investors to offer their cryptocurrency assets to Nexo in exchange for Nexo’s promise to pay interest. According to the order, Nexo marketed the EIP as a vehicle for investors to earn interest on cryptoassets and, at Nexo’s discretion, used the investors’ cryptoassets in various ways to generate income for its own business and to fund interest payments to EIP investors. . The order finds that the EIP is a security and that the offering and sale of the EIP did not qualify for an exemption from SEC registration. Therefore, Nexo was obliged to register the offer and sale of the EIP, which it did not do.”
The authority does not make exceptions, it enforces the rules more and more strictly
“If you offer or sell products that are considered securities under established laws and legal precedents, then it doesn’t matter what you call those products, those laws apply and we expect them to be followed” – said Gurbir S. Grewal, director of the SEC’s Division of Enforcement.
“Where crypto companies do not comply, we will continue to pursue the facts and the law to hold them accountable. In this event, among other measures, Nexo will terminate its unregistered lending product for all US investors” – he stated SEC Chairman Gary Gensler.
Global regulators following the collapse of several crypto platforms, including Celsius and FTX have stepped up their enforcement efforts. In December 2022, Nexo announced that it would liquidate its US operations following reaching an “impasse” with regulators.
“Unfortunately, it has now become clear to us that despite rhetoric to the contrary, the United States is unwilling to lead the way in enabling blockchain transactions. We cannot assure our clients that the regulators have their interests in mind” Nexo said then.
“We are satisfied with this unified solution, which clearly puts an end to speculation regarding Nexo’s relations with the United States” – said the co-founder of Nexo, Antoni Trenchev a in a press release. “Now we can focus on what we do best – building seamless financial solutions for our global audience.”