Crypto lending company Nexo has agreed to pay a total of $45 million to US regulators to settle claims that it failed to register the sale of its Earn Interest Product (EIP).
According to two separate statements by the US Securities and Exchange Commission and the North American Securities Administrators Association, Nexo has agreed to pay a $22.5 million penalty to each of these regulators, or a total of $45 million to settle charges that it violated investor-protection laws.
The crypto lender has also agreed to cease its offer and sale of the EIP to U.S. investors, the SEC said.
Nexo began offering its interest prdocut to US custoerm in June 2020. The product allowed users to tender their crypto assets in exchange for industry-high interest rates. The SEC claims the product is a security and thus Nexo should have registered with the agency.
“We are not concerned with the labels put on offerings, but on their economic realities. And part of that reality is that crypto assets are not exempt from the federal securities laws,” said Gurbir Grewal, Director of the SEC’s Division of Enforcement, adding:
“If you’re offering or selling products that constitute securities under well-established laws and legal precedent, then no matter what you call those products, you’re subject to those laws and we expect compliance.”
Launched in 2018, Nexo is a British digital asset lending company that loans out client funds and uses the proceeds to pay interest. The company first went head to head with US officials in September 2022 after several states, including California, Vermont, Oklahoma, South Carolina, Kentucky, and Maryland, filed cease-and-desist orders against the company.
In a press release, Nexo said the settlement is on a no-admit-no-deny basis. In other words, the company did not admit or deny any wrongdoing. Nexo co-founder Antoni Trenchev said:
“We are content with this unified resolution which unequivocally puts an end to all speculations around Nexo’s relations to the United States. We can now focus on what we do best – build seamless financial solutions for our worldwide audience.”
As reported, Nexo’s Bulgarian offices were raided by local police last week, with authorities investigating suspected money laundering, tax offenses, computer fraud, and other violations. Subsequently, the crypto lender saw a wave of withdrawals.
It is worth noting that Nexo is one of the many crypto lending companies that hasn’t gone out of business. Other major crypto lenders, including Celsius, BlockFi, and most recently the crypto lending unit of Genesis, have all filed for bankruptcy amid the recent market downturn.
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