One of the Few Remaining Centralized Crypto Lenders “NEXO” Settles for $45 Million With the SEC

Crypto lending firm Nexo Capital Inc. has agreed to pay $45 million in penalties to the U.S. Securities and Exchange Commission (SEC) and state regulators to settle charges that it failed to register its crypto asset lending product, the Earn Interest Product (EIP), with the SEC.

The company will pay a $22.5 million penalty to the SEC and another $22.5 million in fines to state regulators. Nexo began offering its lending product in June 2020, allowing U.S. investors to give their crypto assets to the company in exchange for a promise of interest.

The company ceased offering the product to new investors after the SEC announced similar charges against another company in February 2022. Nexo did not admit or deny the SEC’s findings, but agreed to a cease-and-desist order prohibiting it from violating the registration provisions of the Securities Act of 1933.
The settlement also requires Nexo to pay a fine of $424,528.30 to each of the 17 state securities regulators that agreed to the terms of the settlement.

At the time of writing, NEXO is changing hands at a price of a bit less than $0.58 and is up by 10% in the last 7 days.

Nexo is one of the few remaining centralized cryptocurrency lenders in the market, as its competitors Celsius, BlockFi, Vauld, Voyager, and several others either went bankrupt or ceased operations.
Nexo started out as a centralized lending and borrowing platform that allows people to take out stablecoin loans as well as fiat cash loans by depositing their crypto holdings as collateral. The platform also offers high yield interest accounts, which act as the source of liquidity for the platform’s loans. In addition, Nexo has also committed to buying and burning $50 million worth of Nexo Tokens as part of its most recent Buyback Program.

Nexo’s bank license will bring users enhanced legal safeguards and help it expand its footprint in the U.S. The company has taken a stake in a federally-regulated U.S. bank, Summit National Bank, paving the way for the company to offer banking services to Americans as a licensed institution. The deal will also help Nexo expand its footprint in the U.S. Nexo has over $4 billion in assets under management and is not the first crypto firm to have obtained a banking license, though it’s a rare phenomenon in the industry.

☝These are my opinions, not financial advice, always DYOR.

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