BISMARCK — The state of North Dakota has reached a settlement agreement with a cryptocurrency platform related to the sale of unregistered securities, the state Securities Department announced Monday, Feb. 6.
The cryptocurrency platform Nexo Capital Inc. sold earn interest product (EIP) accounts to over 93,000 investors in the U.S., totaling over $800 million, according to the Securities Department.
Nexo, a Cayman Islands corporation formed in 2018, provides virtual currency-related financial services to retail and institutional customers and investors in the U.S., including trading, borrowing and lending services.
"During the investigation, it was discovered that EIP investors could passively earn interest on digital assets by loaning those assets to Nexo. Nexo maintained total discretion over the revenue-generating activities utilized to earn returns for investors," the Securities Department said in a statement. "The company offered and promoted the EIP and other products to investors in the U.S. via its website and social media channels suggesting in some instances that investors could obtain returns as high as 36%."
Nexo allegedly failed to comply with state securities registration requirements, and consequently investors were sold unregistered securities and were not given the information needed to understand the potential risks, according to the Securities Department.
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A multi-jurisdictional working group reached a $22.5 million settlement with Nexo on behalf of 53 U.S. jurisdictions. Under the settlement, Nexo agreed to investor protection procedures, the Securities Department said. The U.S. Securities and Exchange Commission reached a separate settlement with Nexo for the same amount of money.
Nexo will pay a fine of $424,528.30 to states that are part of the settlement, including North Dakota, according to the Securities Department.
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