Nexo to pay $45 million in penalties in SEC, NASAA probe

Key Takeaways

  • Nexo will pay a $22.5 million fine to the SEC and another $22.5 million to other charges by state regulators.
  • NASAA stated that the probe was conducted by 17 separate state securities regulators, who agreed to the terms set out in the crypto lender’s settlement.

Crypto lending company Nexo Capital has agreed to pay $45 million in settlement to the U.S. Securities and Exchange Commission and the North American Securities Administrators Association (NASAA) for allegedly failing to register the offer and sale of its EIP-Earn Interest Product.

As per the official statement, Nexo has agreed to pay a $22.5 million fine to the SEC and another $22.5 million to settle similar charges by state regulators.

Making an official statement, NASAA said that the latest settlement comes after a probe into Nexo’s alleged offer and sale of securities after the past year of investigations. “During the investigation, it was discovered that EIP investors could passively earn interest on digital assets by loaning those assets to Nexo,” NASAA said.

SEC had alleged that the crypto lender offered and promoted the EIP to investors in the U.S. through its website and social media platforms, hinting in some instances that investors could gain returns as high as 36%.

The latest development comes amid Nexo facing a probe by Bulgarian authorities for alleged money laundering, tax offenses, banking without a license, and computer fraud.

Commenting on the SEC probe on Nexo, SEC Chair Gary Gensler said: “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.”

NASAA stated that the probe was conducted by around 17 separate state securities regulators, who agreed to the terms set out in the crypto lender’s settlement.

Earlier this week, Nexo had filed a lawsuit against the Cayman Islands Monetary Authority (CIMA) for declining its registration as a virtual asset service provider (VASP) in the island nation.

In December, Nexo had announced that it was closing its operations in the United States, citing the move as regrettable but necessary.” The crypto lender had then said that it has been talking to U.S. regulators for 18 months to determine how to comply with U.S. financial laws.

Saniya Raahath
Saniya Raahath

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