The U.S. Securities and Exchange Commission (SEC) and various state regulators have demanded $45 million from cryptocurrency lender Nexo after the company was accused of failing to register its Earn Interest Product (EIP).
Nexo pays the SEC $22.5 million and many state regulators $22.5 million for its EIP offering.
Nexo announced a settlement on January 19, 2023, with the Office of the New York Attorney General, the North American Securities Administrators Association, and the U.S. Securities and Exchange Commission (SEC) regarding an unregistered offering.
The Earn Interest Product (EIP), an interest-earning product that enables investors to earn interest on deposited cryptocurrency assets, was introduced by Nexo around June 2020, according to the SEC.
The EIP is a security, and the sale and offer of the EIP did not meet the requirements for an exemption from SEC registration, according to the U.S. regulator.
“We are convinced that a more transparent regulatory environment will soon develop, and businesses like Nexo will be able to offer value-creating goods in the United States in a compliant manner, and the U.S. will further strengthen its position as the world’s engine of innovation,” Kantchev said.
We accused Nexo of skipping crucial disclosure rules meant to safeguard investors by neglecting to register its retail cryptocurrency loan product before making it available to the general public, according to Gensler.
Antoni Trenchev, a co-founder of Nexo, expressed gratitude to the firm’s legal counsel from Schulte Roth and Zabel LLP and said that the Office of the New York Attorney General assisted Nexo in obtaining this “very beneficial” result.
The latest probe into Nexo’s operations, which was started by Bulgarian law enforcement officers, led to Nexo’s settlement with U.S. regulators.