According to the SEC’s order, Nexo started offering the EIP around June 2020 and marketed the product as a means for investors to earn interest on their crypto assets

Nexo, the crypto currency lending firm, has been sanctioned by the US Securities Exchange Commission (SEC) for offering and selling unregistered securities, as regulators continue their crackdown on the crypto industry. This was announced via an SEC press release on January 19th which stated that Nexo has been fined $45 million for failing to register the offer and sale of a crypto currency lending product, Earn Interest Product (EIP) that promised returns on deposited crypto.

The crypto lending platform started offering the Earn Interest Product around June 2020 and marketed it as a means for investors to earn interest on their crypto assets, according to the SEC’s order. Nexo used its investors’ crypto assets in different ways, including to fund interest payments to EIP investors as well as generate income for its own business, the SEC alleged.

SEC Chair Gary Gensler said the agency charged Nexo with failing to register its retail crypto lending product before offering it to the public, bypassing essential disclosure requirements that are designed to protect investors. Compliance with our time-tested public policies isn’t a choice.

The crypto lending platform has not admitted fault or denied the findings by the SEC, but it has agreed to pay $22.5 million fine to the SEC and will not offer the EIP to investors in the US. It will also phase out all of the products and services it offers in the US. An additional $22.5 million in fines has been imposed on the crypto lending platform which it will pay to settle similar charges by state regulators.