Cryptocurrency platform Nexo Capital has agreed to pay $45 million in fines to the US Securities and Exchange Commission (SEC) and the North American Securities Administrators Association (NASAA) for failing to register the offering and sale. ), a product that provides passive income to its users by depositing digital assets.
The news was announced by the SEC and NASAA in two separate statements released on January 19th. According to a filing with the Securities and Exchange Commission, Nexo has agreed to pay a $22.5 million fine and terminate offering its passive income product to US investors.
The additional $22.5 million will be paid as fines to settle similar charges by government regulatory authorities, the report said.
In its statement, NASA said the settlement follows a year of investigations into the alleged offering and sale of Nexo bonds.
“During the investigation, it was discovered that EIP investors could passively earn interest on digital assets by lending these assets to Nexo.”
Nexo retains full discretion over revenue-generating activities used to generate returns for investors. The Company has offered and promoted EIP and other products to US investors through its website and social media channels, indicating in some cases that investors can earn returns of up to 36%.
The SEC stated that when negotiating the settlement, the committee took into account the level of cooperation and promptly corrective actions Nexo took to address its deficiencies.
SEC Chairman Gary Gensler said:
“We accuse Nexo of failing to register a cryptocurrency lending product for retail investors before it was offered to the public, and of circumventing basic requirements designed to protect investors.”
“Compliance with our time-tested public policies is not an option. When cryptocurrency companies fail to comply with the law, we will continue to hold them legally liable. In this case, among other actions, Nexo is terminating its unregistered lending product for all US investors.”
While the company has not conclusively acknowledged or denied the findings of the SEC’s investigation, the Nexo settlement came on the basis of a cease and desist order prohibiting the company from violating any provision of the Securities Exchange Act of 1933.
NASA also explained that the investigation was conducted by at least 17 separate securities regulators in the country, who agreed to the specific terms.
While these states are not named, Nexo will pay a fine of $424,528 each.
Nexo confirmed the news to its 288,600 followers in a tweet posted on January 3rd.
Nexo has reached a final, historic decision with the U.S. Securities and Exchange Commission (SEC), the North American Securities Administrators Association (NASAA), which is made up of all 50 U.S. states and three territories, and the New York Attorney General.co/modjbPsOdV
– Nexus January 19, 2023
Nexo has reached a historic decision with the US Securities and Exchange Commission (SEC), the North American Securities Administrators Association (NASAA), which is made up of all 50 states and three US territories, and the New York Attorney General.
– Nexus
Nexo said US federal regulators have not alleged fraud or deceptive business practices.
Nexo co-founder Anthony Trenchev said the company was relieved to reach an agreement with US authorities:
“We are pleased with this consolidated decision that unequivocally ends all speculation about Nexo’s relationships with the United States. Now we can focus on what we do best – creating financial solutions that benefit our global audience.”
Earlier this month, on January 12, Bulgarian prosecutors raided and searched the Bulgarian offices of Nexo for alleged involvement in a large-scale money laundering scheme, as well as violations of international sanctions against Russia.
On January 16, Nexo took its own action against the Cayman Islands Monetary Authority for giving “too much weight” to its enforcement actions by its decision to refuse to register a virtual asset service provider in its jurisdiction.
Founded in the Cayman Islands in 2018, Nexo Capital has provided a variety of trading, loan and income products to institutional and retail clients across the United States.
Earlier this month, at. 12, accused of involvement in a large-scale money laundering scheme as well as violations of Russia’s international sanctions.
in january. On September 16, Nexo took its own action against the Cayman Islands Monetary Authority for giving “too much weight” to the regulator’s enforcement action in its decision to deny registration of a virtual asset service provider.
Nexo Capital has provided a variety of trading, borrowing and lending services to retail and institutional clients in the United States since its founding in the Cayman Islands in 2018.
Cointelegraph reached out to Nexo Capital for further comment, but did not receive an immediate response.
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