Crypto firm Nexo Capital agrees to pay $45 million to settle U.S. SEC, state charges

The U.S. Securities and Exchange Commission (SEC) and state authorities have accused Nexo Capital Inc. of failing to register its crypto asset loan product. Nexo Capital Inc. has agreed to pay $45 million in fines as part of the settlement.

According to a statement from the SEC, Nexo has agreed to pay a $22.5 million fine to the SEC as well as an additional $22.5 million in penalties to state authorities in connection with its Earn Interest Product offered to American investors.

According to the SEC, Nexo started to offer its loan product around June 2020, enabling American investors to send the firm their crypto assets in return for the promise of interest. Following an SEC announcement in February 2022 that identical allegations had been made against another firm, the corporation stopped marketing the product to new investors.

Nexo said it was "satisfied" with the settlement but did not accept or reject the SEC's conclusions. "We are hopeful that a clearer regulatory picture will emerge soon, and firms like Nexo will be able to provide value-creating solutions in the United States in a compliant way," the company's co-founder Kosta Kantchev said.

Due to disagreements with authorities, the UK-based cryptocurrency lender said last month that it will gradually stop offering its goods and services in the United States.

The SEC has been pursuing these offers by cryptocurrency companies over the last year, and in February 2022 it filed its first charges against a BlockFi Inc. affiliate for marketing a similar product.

The SEC filed a lawsuit against Genesis Global Capital LLC and Gemini Trust Company LLC last week over their lending service.

Nexo is having issues with other governments. Four persons were accused last week as part of an investigation into the firm by Bulgarian prosecutors. On January 12 in Sofia, the capital, authorities conducted a search at more than 15 of the company's locations, claiming to be looking into the formation of an organized criminal organization, tax offenses, money laundering, unauthorized banking, and computer fraud.

The business acknowledged that Bulgarian officials had visited one of its locations, but said that only administrative tasks like payroll and customer service were performed there.