Nexo Pays $45M to Resolve SEC and State Regulator Charges
- Nexo agreed to pay $45 million to settle SEC and state regulator charges.
- Nexo was charged by SEC for failing to register the offer and sale of EIP products.
Nexo Capital Inc, a significant lending platform, has agreed to pay $45 million in penalties to settle charges brought by the Securities and Exchange Commission (SEC) and state regulators. For failing to register the offer and sale of its retail crypto asset leading products, known as Earn Interest products.
As per the SEC report, Nexo agreed to pay a $22.5 million penalty to the SEC and another $22.5 million as a fine to state authorities in relation to its Earn Interest Product (EIP) to U.S. investors.
Additionally, Gurbir S. Grewal, Director of the SEC’s Enforcement Division, has stated that the agency is not concerned with the labels placed on offers but rather with their economic realities and that crypto assets are subject to federal securities law.
Reason for Nexo’s Charges
Based on the agency, Nexo will begin promoting and selling the EIP in the United States in 2020. Investors can offer their cryptocurrency to Nexo in exchange for the company’s guarantee to pay the interest due on the products. The product was promoted by Nexo as a mechanism for investors to earn interest. But it also used its flexibility to use investor crypto assets. For a variety of ways to make money for its own activities and pay interest to EIP investors.
The SEC’s investigation’s findings were not officially accepted or rejected by the company. But a halt order agreement that barred any future violations of the Securities Act of 1933 led to Nexo’s settlement.
Nexo Co-founder Kosta Kantchev stated that
“We are confident that a clearer regulatory landscape will emerge soon, enabling corporations such as 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.”
And the co-founder has stated that the payment will be spread out over a year. Nexo also announced its intention to exit the US market in Dec., citing a breakdown in negotiations with US regulators.
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