Cryptocurrency lending firm Nexo has settled with the U.S. Securities and Exchange Commission (SEC), according to a press release. January 19th.
The SEC has indicted Nexo for failing to register Earn Interest Product (EIP), a retail lending product that Nexo first launched in the United States in June 2020.
Nexo allegedly promoted EIPs as a way for crypto investors to earn interest from their crypto deposits and invest the funds received at their own discretion. Nexo was required to register this activity with the SEC, but did not.
The company agreed to settle with the SEC by paying $22.5 million in liquidated damages. Nexo also plans to pay him an additional $22.5 million to settle with state regulators such as New York, Texas, Washington and Alaska. This brings his total penalty to $44.5 million.
Nexo should also stop offering EIPs to US investors. The SEC said it takes into account that Nexo is already working together towards this end.
Nexo made a positive comment about reconciliation. The company called the result “a final breakthrough solution.” He emphasized that the allegations related only to EIP products and did not allege any fraudulent or misleading practices.
The company also noted that the settlement ended a multi-year investigation into Nexo, and said there was no need to admit or deny the allegations.
The SEC has taken action against other crypto companies offering similar lending products. The regulator settled with BlockFi, which went bankrupt in February 2022, for his $100 million. Incidentally, as mentioned above, Nexo took note of the accusations against its competitor and immediately stopped offering his EIP to US-based customers.
The SEC also indicted Gemini and Genesis over Gemini Earn, a cryptocurrency lending product that went bankrupt earlier this month. Elsewhere, Coinbase closed its Lend program in 2021 following threats of SEC actions that were ultimately unfulfilled.
Despite a high-profile bankruptcy last summer, the SEC took no action against Celsius.