Crypto Lender Nexo was fined $45 million for violating federal securities laws.
Gary Gensler increased US Securities & Exchange Commission (SEC) enforcement in 2022.
Recently, Gemini was also charged by the SEC over its Gemini Earn program.
Securities and Exchange Commission (SEC) for an unregistered offer and sale of its lending product.
The securities regulator announced in a statement that Nexo agreed to pay the fine of $45 million. It also includes a $22.5 million fine for attempting to promote and sell the product to American investors. Furthermore, the platform will pay an extra $22.5 million to settle identical charges filed by state regulatory authorities.
Nexo began marketing and selling its Earn Interest Product (EIP) in the United States in and around June 2020, in accordance with the SEC's directive. The product guaranteed the holders that Nexo would pay interest on it.
However, according to the order, Nexo took advantage of the opportunity to use investors' crypto assets in a number of ways to support interest payments and create revenue for its own business. The SEC claims that the EIP is a security and that its sale and offer did not meet the standards for SEC registration exemption.
SEC Chair Gary Gensler said, “Adherence with our time-tested public rules isn't an option. Where crypto companies fail to comply, we will continue to hold them accountable based on the facts and the law. In this case, Nexo, among other things, is discontinuing its unregistered lending product to all US investors.”
The platform, however, has not accepted or rejected the allegations. The SEC claims that it has only agreed to the agency's cease-and-desist order.
Notably, the SEC has been more strict with regard to crypto products. According to Cornerstone Research, the SEC launched 30 enforcement proceedings regarding cryptocurrencies in 2022 under the chairmanship of Gary Gensler. The report further added that this represents a 50% increase from 2021.
Nonetheless, lending products continue to be a source of regulatory contention in the United States. This month, the SEC charged Gemini for the unregistered offering made through the Gemini Earn program.
As far as Nexo is concerned, this is not the end of the platform's concerns. As CoinGabbar earlier reported, Bulgarian police searched the lender's Sofia office. Nexo is now being investigated for alleged tax evasion, money laundering, and illegal banking activities.
Meanwhile, media reports stated that the lending platform has filed a lawsuit against the Cayman Islands Monetary Authority (CIMA). The suit is about CIMA's refusal to grant Nexo a virtual asset license.
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