Indiana Securities Division Joins $22.5 Million Settlement With The Nexo Group Related To Cryptocurrency

 The Office of the Indiana Secretary of State, Securities Division joined other state securities regulators and the U.S. Securities Exchange Commission (SEC) in jointly announcing a settlement with Nexo Capital, Inc. (Nexo). The settlement requires Nexo to pay a fine of approximately $22.5 million to states and U.S. territories. Indiana’s portion is approximately $424,528. Some of these funds will go towards the Indiana Securities Restitution fund to help victims of securities violations and to an enforcement fund supporting investor education.

The action arises out of claims that Nexo issued securities consisting of digital asset lending products that were not registered with the Securities Division in violation of state laws.

Nexo’s securities, called “Earn Interest Products” or “EIPs”, offered interest to investors who set up accounts hosted by Nexo in which they deposited cryptocurrency assets. The Division alleges that the accounts, which lack the protections offered by banking institutions such as the FDIC, were pooled and used to fund Nexo’s lending and trading operations.  The purpose of registration is to require that investors receive financial and other significant information concerning securities being offered and to prohibit deceit, misrepresentations, and other fraud in the sale of securities. 

Indiana is one of the eight leading states, playing an integral role in reaching this settlement.

Through the EIP, investors expected to 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, suggesting in some instances investors could obtain returns as high as 36%. The Securities Division states that over one thousand Hoosiers invested assets worth over $6.4 million with Nexo in EIPs.  Nationally, more than 93,000 investors invested over $800 million in Nexo’s offering.

Indiana Secretary of State Diego Morales thanked Securities Commissioner Marie Castetter for her Division’s efforts, stating “My office will continue to investigate and enforce violations of securities laws, which exist to protect the public and allow Hoosiers to make informed decisions when placing their life savings into new and potentially volatile financial products.”

Before investing, always do your research and don’t assume a company is reputable, properly registered, or following the law. If you believe you’ve been victimized by a cryptocurrency-related offering, please visit the Indiana Secretary of State Securities Division or contact the Securities Division at [email protected] or (317) 232-6681.