Crypto lender Nexo pays $45 million in fines to SEC, states

The digital-asset firm Nexo Capital will pay $45 million in penalties to U.S. federal and state regulators over allegations that it broke securities rules by offering a crypto lending product.

The Securities and Exchange Commission on Thursday said that Nexo's Earn Interest Product amounted to a security that should have been registered with the agency. It's the latest in a series of cases that Wall Street's main regulator has brought over similar products.

Zach Gibson/Photographer: Zach Gibson/Bloomb

"We are not concerned with the labels put on offerings, but on their economic realities. And part of that reality is that crypto assets are not exempt from the federal securities laws," Gurbir Grewal, the SEC enforcement director, said in a statement.

The Securities and Exchange Commission in Washington
Nexo will pay $22.5 million to the SEC, and $22.5 million to settle allegations from state regulators, the SEC said. Nexo did not admit or deny the agency's findings in the settlement. In September, regulators from eight U.S. states — California, Kentucky, Maryland, New York, Oklahoma, South Carolina, Vermont and Washington — said Nexo was offering interest-earning accounts without registering the investment products as securities.

In December, Nexo said it was phasing out its products and services in the U.S. market after cease-and-desist orders from multiple states over its interest-earning products.

In a statement, Nexo called the settlement a "final landmark resolution" with the SEC, the North American Securities Administrators Association and several other state authorities. "We are content with this unified resolution which unequivocally puts an end to all speculations around Nexo's relations to the United States," added Antoni Trenchev, co-founder of Nexo, said in a statement.

After BlockFi agreed last February to settle similar allegations with the SEC and states for a combined $100 million, Nexo said it would stop accepting new US clients for its lending products and pause interest payments on new deposits from existing American users.

— With assistance from Allyson Versprille, Slav Okov, Beth Williams and Olga Kharif.