Nexo Admits Regulatory Violation, Set to Pay $45M Fine

• Nexo has agreed to pay regulators $45 million in fines due to regulatory violations.
• The firm clarified in a separate post that the fine is unrelated to illicit business activities.
• A total of 17 state securities regulators have investigated Nexo’s EIP, according to reports. 
• Recently, Bulgarian authorities raided more than 15 of Nexo’s sites.

Crypto lender Nexo has agreed to pay $45 million in fines to regulators due to regulatory violations and resolved to cease offering and selling the Earn Interest Product (EIP) to U.S. investors, according to a recent statement by the United States Securities and Exchange Commission (SEC).

Nexo has settled with a $22.5 million penalty to the SEC and another $22.5 million in fines to the North American Securities Administrators Association (NASAA) concerning its Earn Interest Product.

However, the lender established in a separate post that the premise of the fine is unrelated to fraud or illicit business activities. Instead, in the statement, Nexo said that the fine emanated due to the failure to register its EIP with regulators. 

In addition, the firm claimed that the decision to pay the penalties came as an attempt to end all investigations into numerous aspects of Nexo’s business.

Insights into the Circumstances of the Fine

While explaining the rationale behind the fine, the SEC stated that the cooperation and willingness of Nexo to address its shortcomings convinced the regulator to reduce the levity of the sanction.

NASAA, on the other hand, divulged that about 17 separate state securities regulators launched an investigation into Nexo’s EIP. Consequently, upon the conclusion of the investigation, the regulators accepted the conditions stipulated in the lender’s settlement. Therefore, Nexo will pay about $424,528 to each regulator, though NASAA didn’t disclose their names.

According to the statement, the co-founder of Nexo, Antoni Trenchev, said that the payment would be spread out over a year. Also, Trenchev expressed optimism that a healthy business atmosphere would result as clearer regulations become established in the United States. 

Nexo is also struggling with authorities outside the US. As part of an investigation into the company, Bulgarian authorities raided over 15 of Nexo’s sites last week in Sofia and charged four people. The regulators stated that they were investigating an organized crime group, tax crimes, money laundering, prohibited banking activity, and computer fraud.

On the Flipside

• Despite regulatory scrutiny on Nexo, the firm insisted that it had cooperated fully with government inquiries since the beginning.

  “These resolutions are the pinnacle of almost two years of work and clearly show that Nexo is not a problem but part of the solution,” Nexo stated.

Why You Should Care

Nexo announced last December that it would halt its U.S. operations after reaching a “dead end” with regulators. However, Nexo’s US chapter didn’t end with its exit announcement as it settled with the authorities for $45 million in fees. Additionally, it shows that US regulators have intensified their enforcement efforts following the collapse of crypto companies like Celsius and FTX.

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