In addition to paying penalties, Nexo will reportedly suspend its unregistered loan product for all US investors.
Crypto lending firm Nexo has agreed to pay fines of $45 million to the Securities and Exchange Commission (SEC) for violating federal securities law. According to the regulatory agency, Nexo did not register its crypto asset lending product. The SEC further stated that the crypto platform initiated this unrecorded security in 2020, allowing US clients to earn.
Addressing the situation in a statement, SEC Chairman Gary Gensler explained:
We accuse Nexo of 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 is not an option.”
Furthermore, Gensler suggested that the SEC would remain relentless in holding companies that deal in cryptocurrency accountable. He concluded that Nexo would stop offering its unregistered loan product to all US investors.
SEC Division Enforcement Director Gurbir S. Grewal echoed some of Gensler’s remarks. He also emphasized that the SEC seeks compliance with federal securities laws, regardless of pre-established product “labels.” As the Director of the Compliance Division said:
“If you are offering or selling products that constitute securities under well-established laws and legal precedents, then no matter what you call those products, you are subject to those laws and we expect your compliance.”
In other words, Grewal suggested that crypto assets present the same economic realities as other assets that are subject to federal securities laws.
Nexo agrees to pay fines without affirming or denying SEC allegations
Nexo agreed to pay the fines without admitting to any wrongdoing. The crypto lender will remit $22.5 million to the SEC and another $22.5 million fine to state regulators. According to the SEC, this latest payment is related to the Earned Interest Product for US investors.
Nexo expressed satisfaction with the SEC ruling and hoped for more structured oversight within the crypto industry. According to the co-founder of the crypto lender, Kosta Kantchev, “they are confident that a clearer regulatory landscape will emerge soon, and companies like Nexo will be able to offer products that create value in the United States in a compliant manner.”
In dispelling SEC complaints, Nexo also “focuses on what we do best” and develops “seamless financial solutions” for global audiences.
The development of the Nexo-SEC sanction comes amid increasing efforts by US regulators to crack down on breaches in the crypto space. These scrutiny efforts intensified following the sudden and dramatic collapse of the FTX cryptocurrency exchange last November.
Other similar crackdowns by the SEC include lawsuits against Gemini Trust Company LLC and Genesis Global Capital LLC. According to the securities regulator, both crypto-centric platforms also illegally sold products to countless investors through their crypto lending program.
Bulgarian development
Nexo is also clashing with authorities elsewhere amid its recently concluded SEC case. according to a Reuters report, Bulgarian authorities indicted four people as part of an ongoing investigation into the crypto lender. On January 12, these authorities raided more than 15 Nexo sites for a series of reported financial crimes.
next
Tolu is a Lagos-based blockchain and cryptocurrency enthusiast. He likes to demystify the crypto stories down to the basics so that anyone anywhere can understand them without too much prior knowledge. When he’s not up to his neck in crypto-stories, Tolu likes music, loves to sing, and is an avid movie buff.
