Cryptocurrency platform fined $45 million for illegal activities

STATEN ISLAND, NY — US government entities announced Thursday one of the latest efforts against a cryptocurrency platform that could see the entity lose up to $45 million.

The Office of Attorney General Letitia James announced the action against Nexo Inc. and Nexo Capital Inc. for their involvement in the unregistered offer and sale of securities and commodities, and for misleading investors about their registration status.

“Cryptocurrency companies are unreliable and suspect, but they are not immune from accountability,” James said. “Nexo ignored repeated warnings from my office to register and today they are paying the price for their misconduct. The days of cryptocurrency companies acting like the rules don’t apply to them are coming to an end.”

The deal targets Nexo for its unregistered offer and sale of securities in the form of an interest-bearing virtual currency account called an Earn Interest Product (EIP). Nexo spokespeople did not respond to a request for comment by press time.

Joining James in a $22.5 million deal were California, Indiana, Kentucky, Maryland, Oklahoma, South Carolina, Vermont, Washington and Wisconsin, according to his office, which also secured a separate $1.5 million deal for the purchase. and sale of unregistered securities of the company. and commodities through a virtual currency trading platform called Nexo Exchange.

The US Securities and Exchange Commission (SEC) also announced a separate settlement in which Nexo agreed to pay an additional $22.5 million and cease offering and selling variable rate EIP accounts in the United States.

In addition to monetary damages, the provisions in the agreements with Nexo include a five-year ban on Nexo from offering or selling securities in New York, and a requirement that Nexo notify all remaining US investors to remove their virtual assets from the Nexo platform before April 1st. , 2023.

SEC Chairman Gary Gensler said the settlements will mean Nexo’s unregistered loan product will no longer be available to US citizens.

“We accuse Nexo of failing to register its retail crypto lending product before offering it to the public, ignoring essential disclosure requirements designed to protect investors,” Gensler said. “Compliance with our time-tested public policies is not an option. When cryptocurrency companies fail to comply, we will continue to follow the facts and the law to hold them accountable.”

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