By Michael Scott
The US Security Exchange Commission penalized the leading crypto lender Nexo for violating the SEC Act 1933. Responding to the claims, Nexo has announced plans to pay the court fines.
Nexo Violates the SEC Laws
In 2020, the US crypto lender Nexo introduced the Earn Interest crypto assets that enabled investors to hire their digital assets to the company and earn a considerable interest in return. The Nexo Interest scheme under probe encouraged the firm to trade with the customer assets to generate an income for the company. Also, funds from the troubled scheme were used to pay investors’ interests.
The investigation launched by US regulators disclosed that Nexo traded an unregistered Earn Interest Product (EIP), yet the EIP met the US Securities requirement.
US Regulators Allegations
In a statement shared on January 19, the SEC’s top executive Gary Gensler confirmed that the crypto lender was found guilty of trading unregistered crypto assets. Gensler encouraged other crypto firms offering retail digital assets to comply with the SEC public policies.
Following the regulators’ scrutiny, Nexo was ordered to pay a fine translating to $22.5 million. At the beginning of this year, the SEC had a similar case that involved the Winklevoss brothers’ trading platforms, Gemini and the giant Genesis. The firms were accused of providing an unregistered crypto product to the public.
The SEC’s move on the Gemini Earn Program was to warn crypto lenders to avert engaging in crypto misconduct.
Furthermore, the SEC revealed that after dealing with traded unregistered crypto product charges. Nexo made remedial moves to suspend the Interest program for new US crypto entrepreneurs.
Nexo Paying the SEC Fines
Nexo accepted to pay the SEC fine and an extra $22.5 million to the US State Regulatory Authorities (SRA) in one year. Afterward, Antoni Trenchev, Nexo Founder, and his counterpart Kosta Kantchev petitioned the US regulators to develop clear regulations to ease compliance. Trenchev also assured the crypto community that Nexo would strive to provide the best financial products in the market.
Beyond this, the Cayman based-crypto lender, initiated in 2018, ranks among the best companies providing interest-related products in the crypto space. In March last year, the company promoted its Interest-Earning products to 112,000 traders whose crypto savings was worth over $2.7 billion. Nexo offered a deal of 12% interest after trading with their savings which was a success.
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