Nexo reaches $45M settlement with SEC, others News ▸ US ▸ Regulation
Nexo reaches $45M settlement with SEC, others
The charges concern Nexo's EIP, which is no longer offered in the U.S.
2 min read
Updated: Jan. 20, 2023 at 11:49 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Crypto lending company Nexo has settled with the U.S. Securities and Exchange Commission (SEC), according to a press release on Jan. 19.
The SEC charged Nexo with failing to register its retail lending product — the Earn Interest Product (EIP) — which it first began to offer in the U.S. in June 2020.
Nexo allegedly advertised the EIP as a way for cryptocurrency investors to earn interest on their crypto deposits, then invest the funds it received at its discretion. Nexo was required to register this activity with the SEC but did not do so.
The company agreed to settle by paying the SEC a $22.5 million penalty. Nexo will also pay another $22.5 million to settle with state regulators, including New York, Texas, Washington, and Alaska. This brings its total penalty to $45 million.
Nexo will also be required to stop offering the EIP to investors in the United States. The SEC said it has taken into account that Nexo is already cooperating toward this end: Nexo stated in December 2022 that it would leave the U.S. due to regulatory uncertainty, and it specifically stopped offering the EIP to U.S. investors last February.
Nexo has made positive comments on the settlement. The company called the outcome a “final landmark resolution.” It emphasized that the allegations only concerned its EIP product and did not allege fraudulent or misleading practices.
The company also noted that the settlement closes multi-year inquiries into Nexo and said that it is neither required to admit nor deny the charges.
The SEC has taken action against other crypto companies offering similar lending products. The regulator settled with the now-bankrupt BlockFi in February 2022 for $100 million. Incidentally, Nexo took note of the charges against its competitor and immediately stopped offering its EIP to U.S.-based customers, as noted above.
The SEC also charged Gemini and Genesis over their insolvent cryptocurrency lending product, Gemini Earn, earlier this month. Elsewhere, Coinbase shut down its Lend program in 2021 following the ultimately unfulfilled threat of SEC action.
Despite its high-profile collapse last summer, the SEC did not take action against Celsius, though early reports suggested it probed the firm over its account suspensions.
Correction: This article previously stated that Nexo’s total penalty was $44.5 million rather than $45 million.
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Mike Dalton
Before transitioning to crypto writing in 2018, Mike studied library and information sciences. Currently, he resides on Canada's West Coast.
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The Nexo token is the world’s first dividend-paying asset-backed security token and is backed by the underlying assets of Nexo’s loan portfolio.
Nexo
Nexo is a leading global financial institution specializing in digital asset services, particularly focusing on cryptocurrency lending, exchange, and financial management solutions.