Nexo reaches a $45 million settlement with SEC, agrees to cease and desist its Earn Interest Product
|- Nexo failed to register its lending product, the Earn Interest Product, leading to charges by the Securities and Exchange Commission.
- Nexo already announced its departure from the United States in December 2022.
- Nexo also filed a lawsuit against the Cayman Islands Monetary Authority for rejecting its virtual asset license.
Crypto lender Nexo has faced several challenges recently but is managing to escape one of them. Nexo’s locked horns with regulatory authorities have been reduced. The case with the authorities in the Cayman Islands remains unresolved.
Nexo pays $45 million to SEC
Nexo became another victim of the United States Securities and Exchange Commission’s (SEC) rigorous regulations on Thursday. The crypto lender announced that it would be settling its case with the SEC by paying a penalty of $45 million, as well as ending its unregistered lending product called the Earned Interest Product (EIP).
The investigation, in the first place, began only due to the lack of registration of EIP with the regulatory authorities before being offered to the public. In line with the same, the SEC stated,
“Compliance with our time-tested public policies isn’t a choice. Where crypto companies do not comply, we will continue to follow the facts and the law to hold them accountable.”
Consequently, Nexo faced probing by not only the SEC but the state securities as well. Back in September 2022, as FXStreet reported, the California Department of Financial Protection and Innovation (DFPI) led the investigation along with seven other state securities. California was also the first to issue a cease and desist notice to the crypto lending company for its EIP accounts.
Failing to win the case against the SEC, Nexo agreed to pay half the penalty to the state securities and put an end to the Earn Interest Product. Announcing the decision, the co-founder of Nexo, Kosta Kantchev, said,
“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 to face the Cayman Islands after the United States
Nexo, as it is, was set to depart from the United States, announcing its decision about the same last month. Over the next few weeks, it would slowly phase out its products and services. But even before it could properly exit the country, Nexo picked up a fight with the authorities from the Cayman Islands.
In a lawsuit on January 13, Nexo sued the Cayman Islands Monetary Authority (CIMA) following the denial of a virtual asset license. As per Nexo, the decision was not only unfair, but the regulatory authority also failed to fulfill its constitutional and statutory duties. The crypto lending company is looking to invalidate CIMA’s decision and gain registration in the Islands through this lawsuit.
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