The US Securities and Exchange Commission (SEC) said late on January 19 that it had charged Nexo Capital Inc., a related entity to Bulgarian cryptocurrency firm Nexo, with failing to register a “retail crypto asset lending product” with regulators. Nexo agreed to pay $45 million to settle the charges.
SEC said that Nexo agreed to pay $22.5 million and “cease its unregistered offer and sale of the Earn Interest Product (EIP) to US investors”. The company also agreed to pay another $22.5 million in fines to settle similar charges by regulators in several US states.
“Nexo marketed the EIP as a means for investors to earn interest on their crypto assets, and Nexo exercised its discretion to use investors’ crypto assets in various ways to generate income for its own business and to fund interest payments to EIP investors,” SEC said.
“The order finds that the EIP is a security and that the offer and sale of the EIP did not qualify for an exemption from SEC registration. Therefore, Nexo was required to register its offer and sale of the EIP, which it failed to do.”
SEC’s statement said that the company did not admit or deny the regulator’s findings, but agreed to the cease-and-desist order prohibiting it from violating the registration provisions of the US Securities Act of 1933.
SEC said that in settling the charges, it “considered remedial acts promptly undertaken by the company and the company’s cooperation.”
In a statement posted on the company’s website, Nexo co-founder Antoni Trenchev said that “we are content with this unified resolution which unequivocally puts an end to all speculations around Nexo’s relations to the United States.”
Nexo is under investigation in Bulgaria after its offices were raided by law enforcement last week, as four people have been charged with being part of an organised crime group, money laundering, tax crimes, computer fraud, and providing banking services without a licence.
Following claims and counter-claims regarding Nexo’s ties to political parties and campaign donations, widely-reported by Bulgarian-language media, the country’s Parliament voted on January 18 to set up an ad hoc committee to investigate “all facts and circumstances” concerning the firm’s operations in relation to “carrying out potentially illegal activities”.
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