Nexo has settled the federal and state charges brought against its crypto asset lending product.
The Securities and Exchange Commission (SEC) said in a Thursday (Jan. 19) press release that Nexo will pay $45 million in penalties and stop offering its earned interest product (EIP) after being charged with failing to register the offer and sale of that product.
The penalties include $22.5 million to settle the SEC’s charges and $22.5 million to settle those of some state regulatory authorities, according to the release.
Nexo began offering and selling the EIP product in the United States in 2020, allowing investors to loan it crypto assets in exchange for interest while Nexo used the assets to generate income and fund interest payments, the release said.
The SEC found that Nexo was required to register the EIP and failed to do so.
“Compliance with our time-tested public policies isn’t a choice,” SEC Chair Gary Gensler said in the release. “Where crypto companies do not comply, we will continue to follow the facts and the law to hold them accountable.”
In agreeing to settle with Nexo, the agency noted that the firm had voluntarily stopped offering the product in February 2022 after the SEC announced charges against a similar product, and that it announced in December 2022 that it was phasing out all its products in the U.S.
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Nexo announced Dec. 5 that it would phase out its products and services in the U.S. over the coming months in a “gradual and orderly fashion” after reaching a “dead end” in its dialogue with state and federal regulators.
The firm said in a Thursday (Jan. 19) statement that the settlements are on a “no-admit-no-deny” basis, that the sole allegation involved the EIP product, and that U.S. regulators do not contend that any Nexo customers were harmed.
“We are content with this unified resolution which unequivocally puts an end to all speculations around Nexo’s relations to the United States,” Nexo Co-founder Antoni Trenchev said in the statement. “We can now focus on what we do best: build seamless financial solutions for our worldwide audience.”
The firm added in the statement that it cooperated with the federal government’s inquiries from day one, that it worked with them for two years, and that the firm believes that constructive dialogues around regulatory frameworks are important.
“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,” Nexo Co-founder Kosta Kantchev said in the statement.
