Nexo, a cryptocurrency lending company, has reached an agreement with the Securities and Exchange Commission (SEC), according to a press release issued on January 19.
Nexo was charged by the SEC with failing to register its retail lending product, the Earn Interest Product (EIP), which it began offering in the United States in June 2020.
Nexo allegedly advertised the EIP as a way for cryptocurrency investors to earn interest on their crypto deposits, with the funds it received being invested at its discretion. Nexo was required by the SEC to register this activity, but did not do so.
The company agreed to settle by paying a $22.5 million penalty to the SEC. Nexo will also pay an additional $22.5 million to state regulators in New York, Texas, Washington, and Alaska. Its total penalty now stands at $44.5 million.
Nexo will also be required to discontinue offering the EIP to US investors. The SEC stated that it has taken into account Nexo’s prior cooperation in this regard: Nexo stated that it would leave the United States in December 2022 due to regulatory uncertainty, and it specifically stopped offering the EIP to U.S. investors last February.
Nexo has expressed support for the settlement. The outcome was dubbed a “final landmark resolution” by the company. It emphasised that the allegations were limited to its EIP product and did not allege any fraudulent or deceptive practises.
The company also stated that the agreement concludes multi-year investigations into Nexo and that it is not required to admit or deny the charges.
The SEC has taken action against other cryptocurrency companies that provide similar lending services. In February 2022, the regulator reached a $100 million settlement with the now-bankrupt BlockFi.
As previously stated, Nexo took notice of the charges levelled against its competitor and immediately discontinued offering its EIP to customers in the United States.
Earlier this month, the SEC charged Gemini and Genesis for their insolvent cryptocurrency lending product, Gemini Earn. In other news, Coinbase will shut down its Lend programme in 2021, despite an unfulfilled threat of SEC action.
Despite its high-profile collapse last summer, the SEC took no action against Celsius, despite early reports that it was investigating the firm for account suspensions.
To read our blog on “Nexo booster brings leverage trading to Nexo,” click here
