Crypto lender Nexo has agreed to a $45 million penalty settlement to the Securities and Exchange Commission(SEC) and the state regulators. The settlement was mandated after Nexo was found to violate a regulatory law on its interest product.
On Thursday, the SEC filed a lawsuit against the crypto lender for selling unregistered security. The securities regulator stated in the charge that Nexo failed to register its Earn Interest Product with it. It claimed it should have done so before offering the product to users.
Nexo to Settle SEC and State Regulators
To reduce the tension around the case, Nexo has agreed to a $45 million settlement with SEC and the state regulators. Nexo will pay $22.5 million to the SEC and $22.5 million to state regulators. Nexo also agreed to cease offering the Earn Interest Product (EIP) to its customers.
“We are not concerned with the labels put on offerings, but on its economic reality. And part of that reality is that crypto assets are not exempt from the federal securities law,” said Gurbir Grewal, Director of SEC’s Division of Enforcement.
Global Regulators Continue Strict Enforcement
Earlier this year, the SEC reached a $100 million settlement with Coinbase for breaching its regulatory law on customer registration. BlockFi last February also agreed to a $100 million settlement with SEC and state security on the same allegation as Nexo.
Nexo Cease Operations in the U.S.
In December 2022, Nexo announced it would be phasing out its products and services in the U.S. after failing to reach a consensus with multiple regulators in the state.
Nexo did not admit to or deny the allegations against it while agreeing to the settlement, citing that U.S. regulators didn’t accuse it of defrauding customers or engaging in misleading business practices.
“We are content with this unified resolution which unequivocally put to an end the speculations around Nexo’s relation with the U.S.,” Nexo co-founder Antoni Trenchev said in a press release.
Nexo said it would stop accepting new U.S. clients for its lending products and discontinue interest payments on new deposits from American users. According to its recent press release, Nexo is now focused on building seamless financial solutions for its customers around the globe.
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