Crypto lender Nexo pays $45 million in fines to SEC, states

The SEC said Nexo's Earn Interest Product amounted to a security that should have been registered with the agency.

Digital asset firm Nexo Capital Inc. will pay $45 million in penalties to U.S. federal and state regulators over allegations that it broke securities rules by offering a crypto lending product.

The Securities and Exchange Commission said Thursday that Nexo’s Earn Interest Product amounted to a security that should have been registered with the agency. It’s the latest in a series of cases that Wall Street’s main regulator has brought over similar products.

“We are not concerned with the labels put on offerings, but on their economic realities. And part of that reality is that crypto assets are not exempt from the federal securities laws,” Gurbir Grewal, the SEC enforcement director, said in a statement.

Nexo will pay $22.5 million to the SEC and $22.5 million to settle allegations from state regulators, the SEC said. Nexo did not admit or deny the agency’s findings in the settlement. In September, regulators from eight U.S. states — California, Kentucky, Maryland, New York, Oklahoma, South Carolina, Vermont and Washington — said Nexo was offering interest-earning accounts without registering the investment products as securities.

In December, Nexo said it was phasing out its products and services in the U.S. market after cease-and-desist orders from multiple states over its interest-earning products.

In a statement, Nexo called the settlement a “final landmark resolution” with the SEC, the North American Securities Administrators Association and several other state authorities.

“We are content with this unified resolution which unequivocally puts an end to all speculations around Nexo’s relations to the United States,” Antoni Trenchev, co-founder of Nexo, said in a statement.

After BlockFi Inc. agreed last February to settle similar allegations with the SEC and states for a combined $100 million, Nexo said it would stop accepting new U.S. clients for its lending products and pause interest payments on new deposits from existing American users.

[More: Crypto firms Celsius Network, Gemini face SEC scrutiny]