Crypto Company Nexo Pays over $24 Million to States to Settle Registration Status Allegations

  • New York AG Letitia James and securities regulators from nine other states announced a settlement with cryptocurrency companies Nexo Inc. and Nexo Capital Inc. (collectively, “Nexo”) for up to $24 million to resolve allegations that Nexo engaged in the unregistered offer and sale of securities and misrepresented its registration status to investors.
  • According to the settlement, Nexo allegedly offered and sold interest-bearing digital asset accounts called Earn Interest Product (EIP) accounts but was not registered as a securities salesperson or broker-dealer, as was required to offer and sell the EIP accounts. Nexo also allegedly deceived investors about its registration status.
  • Under the terms of the settlement, Nexo will pay up to $22.5 million to be distributed evenly among all 53 members of the North American Securities Administrators Association (NASAA) which includes all 50 states, D.C., Puerto Rico, and the U.S. Virgin Islands. Nexo also confirmed that it intends to phase out all products and services in the U.S. In addition, Nexo will pay $1.5 million to New York to resolve allegations related to Nexo’s unregistered offer and sale of securities through the Nexo Exchange service, a virtual currency marketplace. Nexo will also be banned from the securities industry in New York for five years.
  • As previously reported, AG James and the state securities regulators brought the underlying suit against Nexo in September 2022.