Bulgarian cryptocurrency lending platform Nexo has been charged US$45mln by the US Securities and Exchange Commission (SEC) after failing to register its Earn Interest Product (EIP) asset-lending product.
Following an investigation, the SEC determined that EIP is an unregistered security and therefore violated the Securities Act of 1933.
Gurbir Grewal, director of the SEC’s Division of Enforcement, commented: “If you’re offering or selling products that constitute securities under well-established laws and legal precedent, then no matter what you call those products, you’re subject to those laws and we expect compliance.”
“We are content with this unified resolution which unequivocally puts an end to all speculations around Nexo’s relations to the United States. We can now focus on what we do best - build seamless financial solutions for our worldwide audience,” said Nexo co-founder Antoni Trenchev.
Co-founder Kosta Kantchev added: “We are confident that a clearer regulatory landscape will emerge soon, and companies like Nexo will be able to offer value-creating products in the United States in a compliant manner, and the US will further solidify its position as the world’s engine of innovation.”
But Nexo’s legal trouble’s do not end there.
Earlier this month, the company became the target of a major investigation by Bulgarian authorities into illegal activity conducted via the platform, including allegedly facilitating terrorist-linked transactions.
A statement by a spokesperson for attorney general Siika Mileva announced that investigations are underway in the Bulgarian capital Sofia to “neutralise illegal criminal activity of the Nexo crypto bank”.
Read more: Nexo may have facilitated terrorist-linked transactions, say Bulgarian authorities
“What I can confirm for now is that you can clearly see that we are fully operational, and I am sure you know that FUD (an acronym for fear, uncertainty and doubt) is very common in the industry,” a Nexo spokesperson told Proactive at the time.
Those investigations are ongoing.
NEXO token responded positively to the SEC resolution, rallying over 12% on Friday to bring the coin’s market capitalisation to a five-week high of US$451mln.