- Nexo has agreed to pay a $45 million settlement in its U.S. securities case
- The lending platform was hit with eight cease and desist orders last year
- Nexo no longer operates in the U.S. having quit in December
Nexo has agreed to pay $45 million to federal and state agencies for failing to register the offer and sale of its retail crypto asset lending product, Earn Interest Product. The lending platform was hit with eight cease-and-desist orders by various U.S. states last September, and has now agreed a settlement with the Securities and Exchange Commission (SEC). Nexo will pay $22.5 million in penalties and an additional $22.5 million to settle similar charges by state regulatory authorities, and has promised to stop the sale of the Earn Interest Product to U.S. investors, although it has already quit the U.S.
Nexo “Violated the Law” with Earn Interest Product
Nexo began offering its Earn Interest Product to U.S. customers in 2020, which allowed them to lock up their crypto with Nexo in exchange for interest. However, last year the regulators in eight states called for Nexo to stop, saying the company had not obtained the correct clearance to do so.
At the time, New York’s Attorney General Letitia James claimed that Nexo “violated the law and investors’ trust by falsely claiming that it is a licensed and registered platform”, adding that it “must stop its unlawful operations and take necessary action to protect its investors.”
The action caused the company to quit the U.S. in December, where it blamed “inconsistent and changing positions among state and federal regulators” and a breakdown in dialogue over what Nexo needed to do in order to prove itself a viable, secure platform for U.S. customers.
Nexo Co-founder Eyes Future Change
Nexo didn’t admit or deny the SEC’s findings, agreeing to a cease-and-desist order to block it from violating registration provisions under the Securities Act of 1933. Kosta Kantchev, co-founder of Nexo, said in a statement that he was confident that things would change soon:
We are confident that a clearer regulatory landscape will emerge soon, and companies like Nexo will be able to offer value-creating products in the United States in a compliant manner, and the U.S. will further solidify its position as the world’s engine of innovation.
For now, however, Nexo won’t be doing any U.S. business.
