A former high-ranking executive of the U.S. Securities and Exchange Commission (SEC) is calling out crypto lender Nexos multimillion-dollar settlement with the regulatory agency.
According to a new press release, Nexo has agreed to a settlement deal with the SEC for selling unregistered securities that will see it paying the regulatory body $22.5 million.
Furthermore, Nexo will also pay another $22.5 million to settle similar charges levied by state authorities.
The SEC finds that starting around June 2020, Nexo began offering its earn interest product (EIP), which was marketed as a way for traders to earn interest on their digital assets. However, the SEC deemed the EIP as a security, which falls under its jurisdiction and must be registered.
As stated by SEC Chair Gary Gensler in the press release,
We charged Nexo with failing to register its retail crypto lending product before offering it to the public, bypassing essential disclosure requirements designed to protect investors. Compliance with our time-tested public policies isnt a choice.
However, John Reed Stark, who spent 11 years as the head of the SECs Office of Internet Enforcement, is lampooning Nexos take on the deal, saying that the company referring to the settlement as a victory of innovation is absurd.
Nexo pays a whopping $45 million to the SEC but claims a victory for innovation. Such absurd spin is the latest crypto-trend. BlockFi similarly touted its $100 million SEC penalty as a victory for regulatory clarity.
Just a few weeks before the settlement, Nexo announced that it would be leaving the US due to a lack of regulatory clarity. At the time, the crypto lender also announced that it would cease selling its EIP.
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This article was originally reported on The Daily Hodl.