- Nexo agreed to cease the unregistered offering of its EIP after paying $45M in penalties to settle charges from the SEC
- Nexo stated that the product would be stopped on April 1, 2023.
Crypto lending firm Nexo has announced its decision to halt its crypto asset lending product, known as Earn Interest Product (EIP). This comes nearly a month after Nexo agreed to cease the unregistered offering of its EIP after paying $45M in penalties to settle charges from the U.S. Securities and Exchange Commission (SEC).
In a blog post, Nexo stated that the product would be stopped on April 1, 2023. The crypto lender added that those subscribed to a fixed-term product will have it unlocked on the termination date while also urging users to “begin planning the withdrawal of your funds.”
Nexo cited settlements with SEC and the North American Securities Administrators Association (NASAA) as the reason for halting EIP.
Nexo started offering and selling its lending product in the U.S. in 2020. The EIP allowed U.S. crypto investors to give their crypto assets to the company in exchange for Nexo’s promise to pay them interest. SEC had alleged that “the EIP is a security and that the offer and sale of the EIP did not qualify for an exemption from SEC registration.”
In the agreement, Nexo agreed to pay a $22.5 million penalty to SEC and an additional $22.5 million in penalties to settle similar charges by state regulatory authorities.NASAA added that the probe was conducted by at least 17 separate state securities regulators, who agreed to the terms set out in Nexo’s settlement. Confirming the fines, the crypto lender stated they are pleased to have engaged in a “constructive dialogue” with the regulatory watchdog and settled all the issues.
Nexo’s settlement with U.S. regulators follows the recent probe into the crypto lender’s dealings initiated by Bulgarian law enforcement officials. Bulgarian prosecutors had alleged that Nexo is implicated in a large-scale international criminal scheme that includes money laundering as well as violations of global financial sanctions against Russia. The crypto lender has, however, rubbished the allegations.
Nexo was founded in 2018 by a former member of Bulgaria’s parliament Antoni Trenchev, and Georgi Shulev, who is the son of former deputy prime minister Lydia Shuleva.