Superintendent Linda Trujillo
NMRLD News:
SANTA FE — The Securities Division of the New Mexico Regulation and Licensing Department, has entered into a settlement agreement with Nexo Capital Inc. (“Nexo”), a Cayman Islands corporation that provides virtual currency-related financial services to retail and institutional borrowers in the United States, including trading, borrowing, and lending services.
The settlement arises from a multi-jurisdiction investigation conducted by state regulators into Nexo’s alleged offer and sale of unregistered securities in the form of its Earned Interest Product (“EIP”). During the investigation, it was discovered the 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 company offered and promoted the EIP and other products to investors in the U.S. via its website and social media channels.
“Today’s agreement reflects the ongoing efforts by securities regulators to protect investors and make sure that they are treated fairly by financial services firms,” Superintendent Linda Trujillo said.
Nexo is alleged to have failed to comply with state registration requirements and, as a result, investors were sold unregistered securities in violation of New Mexico law and deprived of critical information and disclosures necessary to understand the potential risks of the EIP.
“Securities laws are designed to protect investors through full and fair disclosure. The registration process is essential to investor protection and New Mexico is committed to taking action when companies ignore their obligations,” Acting Director, Benjamin Schrope said.
Nexo will pay New Mexico a fine of $424,528.30 and cease offering and selling the EIP, accepting further investments in the EIP, and paying interest on existing EIP accounts, until such activities are compliant with applicable state law.
The New Mexico Regulation and Licensing Department which houses the Securities Division, regulates more than 500,000 individuals and businesses in 35 industries, professions, and trades across the state. Its goal is to assure that New Mexicans receive quality services from qualified individuals and businesses while also ensuring fair and prompt administrative process.
