Back in September, the Californian DFPI and other U.S. regulators ordered Nexo to desist from offering Earn Interest Products (EIP), which in the company’s case took the form of crypto asset lending accounts.
At the time the charges were filed, Nexo had already ceased offering the accounts to U.S. investors.
However, U.S. investors could still use the feature by opting for automatic renewal on already existing accounts.
Cooperation With Authorities
Four months later, both the SEC and The North American Securities Administrators Association (NASAA) announced that their legal actions against the lender had concluded. As a result of the investigation, Nexo voluntarily agreed to pay $45 million in fines.
The crypto platform refused to confirm or deny the regulators’ findings – nevertheless, a spokesman for the SEC stated that the penalties imposed on the firm took into account Nexo’s cooperation and willingness to engage with regulators without constraint.
Furthermore, SEC Chairman Gary Gensler stated that Nexo was not charged for operating an EIP but for failing to register it properly.
“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. 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.”
Multiple Fines Split Between Regulators
The $45 million in penalties will be paid out to multiple entities across at least 18 separate fines. The largest accounts for half of the total sum and will be paid out to the SEC directly.
The remaining $22.5 million will be paid out to at least 17 separate state securities regulators, coordinated by the NASAA. The exact states are unnamed; however, we can surmise that California is one of them, owing to their early involvement in the case.
The agreement was also confirmed by Nexo in a 9-part thread on Twitter.
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
— Nexo (@Nexo) January 19, 2023
In the thread, the spokesperson for Nexo once again stated that there were no allegations of fraud or anything else except an unregistered securities offering. The spokesperson also reiterated that the company is pleased to have engaged in constructive dialogue with the authorities and that they will continue to grow and improve based on the feedback they received.
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