- SEC charged Nexo Capital Inc. for failing to register the offer and sale of EIP.
- Nexo agreed to pay a $22.5 million penalty and cease its unregistered offer and sale of the EIP.
- Members of the crypto community retaliated against the actions of the SEC.
The US Securities and Exchange Commission (SEC) charged Nexo Capital Inc. for failing to register the offer and sale of its retail crypto asset lending product, the Earn Interest Product (EIP). Admitting to their mistakes, Nexo agreed to pay a $22.5 million penalty and cease its unregistered offer and sale of the EIP to U.S. investors.
According to an SEC’s order back in 2020, EIP was considered a security, and the offer and sale of the EIP did not qualify for an exemption from SEC registration. Therefore, SEC stated that Nexo was required to register its offer and sale of the EIP, which it failed to do.
The SEC Chair, Gary Gensler talked about Nexo’s penalty in the press statement, explaining:
Compliance with our time-tested public policies isn’t a choice. Where crypto companies do not comply, we will continue to follow the facts and the law to hold them accountable. In this case, among other actions, Nexo is ceasing its unregistered lending product to all U.S. investors.
Nexo was not the only digital asset industry affected by SEC’s tighter grip on the crypto market.
The SEC has conducted an investigation against Coinbase and other digital asset exchanges and is currently going through an ongoing crypto regulatory battle against Ripple.
John E. Deaton, the founder of CryptoLaw.com, took to Twitter to express that SEC foils any action that may provide any yield for US investors unless it’s provided by Goldman Sachs or JP Morgan. Deaton further claimed, “Only accredited investors in the U.S. and Gensler wants to raise the limit even higher.”
While SEC made their regulation stricter against the digital asset industry, the community believes SEC’s action to be a mere jealousy of what power the crypto industry holds for the people. Some members of the community commented that SEC works only for the “rich” and is focused on increasing the wealth gap.
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