Last Updated on January 20, 2023 by Bitfinsider
Nexo agreed to pay $45 million to federal and state agencies after being charged by the Securities and Exchange Commission for failing to register the offer and sale of the Earn Interest Product, a retail crypto asset lending product.
According to the commission, the lender will pay $22.5 million in fines and will no longer sell the Earn Interest Product to US clients. Nexo also agreed to pay an additional $22.5 million to satisfy similar claims brought by state regulators.
“We are not concerned with the labels placed on products, but with their economic realities,” said Gurbir S. Grewal, director of the Securities and Exchange Commission’s division of enforcement. “The federal securities laws do not exclude cryptocurrency assets.”
Nexo began offering and selling the Earn Interest Product in the United States in 2020. The program offered investors to trade their cryptocurrency for Nexo’s guarantee to pay interest. The program was touted as a mechanism for investors to earn interest, and “Nexo exercised its discretion to use investors’ crypto assets in various ways to generate income for its own business and to provide interest payments to EIP investors,” according to the agency.
Nexo agreed to a cease-and-desist order to prevent it from violating Securities Act of 1933 registration provisions without admitting or contesting the agency’s conclusions.
Nexo stated in a statement that the settlements are on a no-admit-no-deny basis.
“We are confident that a clearer regulatory landscape will emerge soon, allowing companies like Nexo to offer value-creating products in the United States in a compliant manner, and the United States will further solidify its position as the world’s engine of innovation,” said Nexo co-founder Kosta Kantchev in a statement on Thursday.
When contacted, Nexo co-founder Antoni Trenchev stated that the money would be distributed over a one-year period.
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