- Nexo began offering up to 12% interest on crypto savings in 2020
- 112,000 people in the US invested assets worth $2.7 billion in Nexo’s program
- Nexo failed to register the offering as a security
Crypto lending firm Nexo was charged by the US Securities and Exchange Commission (SEC) with violating federal securities laws and received a $45 million fine. This is the latest in a series of enforcement measures that US authorities are taking to crack down on violations in the crypto industry, the New York Times writes.
Nexo won’t appeal the fine
Nexo began offering US customers the option to earn interest on crypto savings in 2020. According to the SEC, the interest program qualified as a security, which the firm had not registered properly. Nexo did not admit they had committed violations, but settled the charges. They agreed to pay a fine of $22.5 million to state regulators and an additional $22.5 million to the SEC.
SEC chair Gary Gensler said in a statement:
We charged Nexo with failing to register its retail crypto lending product before offering it to the public, bypassing essential disclosure requirements designed to protect investors. Compliance with our time-tested public policies isn’t a choice.
Nexo investors put in assets of almost $3B
Nexo was founded in 2018 in the Cayman Islands. It is one of many prominent crypto firms that promised to generate interest for clients by investing their crypto funds. In March last year, Nexo’s interest product had a total of 112,000 investors in the US, who held assets worth $2.7 billion in Nexo’s program, court documents show. Nexo assured of returns up to 12 percent.
On Thursday, the SEC announced that Nexo was trying to remedy its wrongdoings. The firm stopped offering its program to new investors in the US and stopped paying out interest on new deposits to current accounts. At the time of writing, Nexo’s token NEXO was trading for $0.82 and gained 12.75% in the last 24 hours according to CoinMarketCap data.
Regulators vs. industry: 1-0
US regulators have been trying to rein in the crypto industry for some time, and this fine reflects those efforts. After crypto exchange FTX collapsed in November last year, the SEC, the Department of Justice, and the Commodity Futures Trading Commission filed charges against then-CEO and founder Sam Bankman-Fried. He has been accused of perpetrating fraud for years.
