Nexo Fined $45 Million, Ceases Crypto Lending in US

Nexo Fined $45 Million, Ceases Crypto Lending in US

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The Securities and Exchange Commission (SEC) has charged Nexo Capital Inc. with failing to register the offer and sale of its retail crypto asset lending product, the Earn Interest Product (EIP). As part of the settlement, Nexo has agreed to pay a $22.5 million penalty and will cease its unregistered offer and sale of the EIP to U.S. investors. Additionally, Nexo has agreed to pay an additional $22.5 million in fines to settle similar charges by state regulatory authorities.

Following the announcement Nexo token surprisingly surged to a 2-month high according to Coinmarketcap.com:

The SEC has issued an order stating that Nexo’s “Earn Interest Program” (EIP) is a security and that it was sold to U.S investors without proper registration. This means that Nexo did not follow the necessary regulations and rules in offering and selling the EIP. The EIP allowed investors to earn interest on their crypto assets, and Nexo used these assets to generate income for its own business and to pay interest to investors.

Nexo’s office in Bulgaria raided by police

The SEC has settled with Nexo, taking into account the actions taken by the company to remedy the situation and its cooperation with the Commission’s staff. After the SEC announced charges involving a similar crypto investment product in February 2022, Nexo voluntarily stopped offering the EIP to new U.S. investors and stopped paying interest on new funds added to existing EIP accounts of U.S. investors. Additionally, in December, Nexo announced that it was phasing out all of its products and services in the United States, including permanently ceasing to offer the EIP to all U.S. investors. This suggests that the company took steps to address the issues raised by the SEC and actively cooperate with the investigation.

“We charged Nexo with failing to register its retail crypto lending product before offering it to the public, bypassing essential disclosure requirements designed to protect investors,” said SEC Chair Gary Gensler. “Compliance with our time-tested public policies isn’t a choice. Where crypto companies do not comply, we will continue to follow the facts and the law to hold them accountable. In this case, among other actions, Nexo is ceasing its unregistered lending product as to all U.S. investors.”

“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 S. Grewal, Director of the SEC’s Division of Enforcement. “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.”

Nexo has agreed to a settlement with the SEC, in which it neither admits nor denies the findings of the SEC. As part of the settlement, Nexo has agreed to a cease-and-desist order, which prohibits the company from violating the registration provisions of the Securities Act of 1933. This means that Nexo will not engage in any activities that violate the laws and regulations related to the registration of securities in the future.

The SEC’s investigation was conducted by Pei Y. Chung, Randall D. Friedland, and Christian J. Ascunce, with assistance from Sachin Verma and Peter Rosario, under the supervision of Stacy L. Bogert. The SEC appreciates the assistance of members of the North American Securities Administrators Association.

The SEC’s Office of Investor Education and Advocacy and Enforcement’s Retail Strategy Task Force has previously issued an Investor Bulletin on Crypto Asset Interest-bearing Accounts. Investors can find additional information about crypto assets at Investor.gov.


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