London-based cryptocurrency lender Nexo Capital Inc. will pay $45 million to settle charges with the U.S. Securities and Exchange Commission (SEC) that alleged its products violated investor protection laws of American consumers, a WSJ report stated.
The SEC claimed that Nexo’s product, called Earn Interest Product, fell under the realm of investments that call for registration and regulatory scrutiny before being launched. Several U.S. states, alongside the SEC, have sued Nexo for selling the Earn Interest Product to the American public.
These products offer higher interest rates on deposits of digital assets to consumers. These assets are then used by the firm to make investments and generate income for the business as well as pay interest to the depositors. The SEC also claimed that Nexo used these deposits for other activities, including trading and engaging in options and swaps contracts.
Nexo has been conducting business in the U.S. since 2020 and claims to have roughly $2.7 billion in assets under management as of March 2022. Once the states sued Nexo in September last year and upon regulatory scrutiny by the SEC, Nexo decided to stop the program for American consumers in December 2022. Also, the crypto lender plans to fully exit U.S. operations around April 1, 2023.
As per the settlement, Nexo will pay half of the $45 million fine to the SEC and the rest to the group of states that sued it. Commenting on the settlement, Nexo co-founder Antoni Trenchev said, “We can now focus on what we do best—build seamless financial solutions for our worldwide audience.” Nexo has neither accepted nor denied any wrongdoing in the settlement claim.
Since the FTX collapse, cryptocurrencies have lost significant value. The world’s most traded crypto asset Bitcoin (BTC-USD) is trading at a 69.4% discount to its all-time high of $68,978.64, marked in November 2021.
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