An agreement has been reached between Nexo Capital Inc. (Nexo) and the Ohio Department of Securities, under which the Cayman Islands-based cryptocurrency lender will stop offering its deposit products to Ohio residents from April 1.
In a previous case, eight US states accused Nexo of providing unregistered products with interest payments that were advertised on social media and the company's website to US citizens, offering potential passive income of up to 36%. The agencies considered this a violation of securities laws, resulting in the company agreeing in January to pay $45 million in a settlement.
The Ohio regulator accused Nexo of not registering with the agency and failing to provide investors with important data to help them assess the possible dangers of investing in cryptocurrency-based deposit products. As of July 31, 2022, Ohio had 2,327 EIP accounts worth $15.8 million. Meanwhile, 93,318 US investors registered with Nexo had a total asset value of $800.2 million.
Department Commissioner Andrea Seidt has issued a statement saying that Ohio's securities laws must be complied with by any firm offering financial or cryptocurrency services. The North American Securities Administrators Association (NASAA) and other state organizations are working with us to protect local citizens from dangerous investments.
The agency said Nexo had agreed to a $22.5 million settlement with regulators in Ohio, as well as other states and the District of Columbia. The Puerto Rico and US Virgin Islands agencies also joined the case. Consequently, Nexo must pay $424,528 to each jurisdiction as a settlement for the violation of the rules. Furthermore, if Nexo does not register its product properly by April 1 this year, it will stop paying interest on all active EIP accounts in Ohio.
Earlier this year, Bulgarian police raided Nexo's offices in connection with suspected money laundering, but Nexo co-founder Anthony Trenchev strongly denied the charges.
