The regulatory authority based in Ohio has recently added its name to the list of a settlement that has been launched against Nexo.
The watchdog from Ohio that has added its name to the list is the Securities Division in Ohio. It is a multistate settlement that has been filed against Nexo, which is a cryptocurrency lending platform.
The reports confirm that the particular settlement amount is $22.5 million and Ohio is now demanding its portion.
Claim by the Regulators
Things work quite differently in the United States when it comes to an entity operating in different states.
If a state requires it, then the particular entity has to acquire an operating license from that particular state even if it already has one from another state.
In some cases, an operational license would suffice only for the respective state and here, Nexo had to honor each state’s demand.
The regulatory authorities from multiple states in the United States had the same stance against Nexo. As per them, while offering the Earn Interest Products (EIP), the platform failed to meet the local requirements.
As the company failed to adhere to the local and mandatory laws and requirements, it is, therefore, held accountable for its actions.
Therefore, a very strong case was filed against the Nexo platform. Apparently, the firm knew that it was at fault and it had to do the right thing.
Before it could acquire the necessary licensing and authorizations, it had to settle the lawsuit with the multi-states. Now, the platform is in the middle of resolving the problem from its end so it can move forward.
Ohio Becomes Part of the Club
The reports suggest that the regulatory authority from Ohio State has added itself to the list of states pursuing the settlement claim against Nexo.
It has, therefore, issued a consent order so it does not get left behind when the settlement funds are distributed among the US states.
The consent order fortifies the regulator’s claims against Nexo that it was in breach of some of the practices and rules when offering the EIP.
Being a cryptocurrency firm, it is crucial for the firm to adhere to such rules and laws that govern the EIP offerings.
What Violation did the Platform Commit?
In the consent order issued, the regulator has also added that the cryptocurrency firm went on to promote its products and services via social media channels.
This practice was not approved at all and it even went on to make claims about the returns that the users would get on their investments.
All these claims were made by the platform to consumers based in the United States without the acquisition of a proper operating license. The firm had to acquire the necessary licensing before it could get involved in such activities.
Instead, it approached the consumers without any proper registration and even promised high returns. In the claims made, the regulators have added that the firm was seen offering up to 36% returns to the consumers.
Claims by the Regulators
The US SEC and NASAA, the association of securities administration from the North American region were the main regulators pursuing the case.
They made claims about the services that Nexo was offering. As per their claims, the platform did not notify or disclose information pertaining to the risks that the users were getting into.
The investors had to be well informed of the risks as well as about the products before they were allowed to invest. However, Nexo failed to do it and as of now, it has paid the settlement amount.
Disbursement of the Settlement Amount
Originally, a $45 million fine was imposed over Nexo for its breach of the local state laws and rules. Out of the total fine, $22.5 million were sent over to the US SEC which goes to the US Treasury.
As for the other half ($22.5 million), it was to be distributed among the states that were part of the settlement.