Nexo Finalize $45M Settlement With U.S SEC and State Regulators

Without admitting or denying findings by the United States Securities and Exchange Commission (SEC), cryptocurrency lending platform Nexo has decided to pay $45 million as a settlement to both the watchdog and the North American Securities Administrators Association (NASAA). The settlement was arrived at after it was discovered that Nexo failed to register its Earn Interest Product (EIP) before offering it up for sale.

As confirmed by both the SEC and NASSA, $22.5 million goes to the U.S. watchdog as a penalty while the crypto lender will halt the sales of its unregistered offer and sale of the EIP to U.S. investors. In effect, no new user will be signed up for the program. Also, the other $22.5 million will be paid as a fine for similar charges to state regulators. These state regulators opened a probe into Nexo’s EIP last year and have since been on the matter.

Based on their discovery, EIP investors could earn passive income from lending their crypto to Nexo with interest as high as 36%. These transactions were carried out discreetly while getting promoted via the company’s website and social media platforms. Seventeen of these state regulators finally came up with these settlement terms with Nexo with more verdicts expected in the coming days.

Andrew Hartnett, NASAA President, and Iowa Deputy Insurance Commissioner said “Our securities laws are designed to protect investors through full and fair disclosure. The registration process is essential to investor protection and states are committed to taking action when companies ignore their obligations.”

“State securities regulators continue to lead the effort to ensure companies involved in offering digital asset investments comply with our laws and that investors are treated fairly.”

Nexo Already Exited the US Market

Already, Nexo announced its intention to shut down its U.S. operation citing its disagreement with the local authorities. 

The Cayman Island crypto juggernaut has been in the news more frequently lately due to several reasons ranging from its failed acquisition of Vauld to the investigations in Bulgaria.

The Bulgarian authorities including prosecutors, investigators, and some international agents ransacked Nexo offices in its region as part of an ongoing investigation of money laundering and tax evasion.