CSI Seeking to Identify Montana Investors in Interest-Bearing Crypto Accounts
Helena, Mont.- Commissioner of Securities and Insurance Troy Downing announced today that a settlement in principle has been reached between Nexo Capital, Inc. (Nexo), the SEC, and state regulators around the country. Pursuant to the terms of the settlement, Nexo will pay a fine of approximately $22.5 million, which will be distributed equally to each of the 53 United States jurisdictions. Nexo will cease offering and selling securities in the United States and its territories. Montana’s portion of the settlement is approximately $424,500.
Nexo, a Cayman Islands corporation established in 2018, provides virtual currency-related financial services to retail and institutional borrowers in the United States, including trading, borrowing, and lending services. An investigation by the North American Securities Administrators Association (NASAA) of Nexo’s activities demonstrated the company offered and sold unregistered securities in the form of its Earned Interest Program (EIP).
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%.
“By failing to disclose material information to Montana investors and by failing to register its securities offerings as required by law, Nexo broke Montana’s securities laws and the trust of their customers. I’m proud Montana played an integral role in reaching this settlement.” Commissioner Downing said, “Before investing, always do your research and don’t assume a company is reputable, properly registered, or following the law.”
CSI estimates 400 Montanans have invested approximately $800,000 in Nexo’s EIP. Nexo investors in Montana are urged to contact the CSI securities team at 406-444-3815 or by emailing [email protected]
Troy Downing is the Commissioner of Securities and Insurance, Montana State Auditor. Commissioner Downing is a two-tour combat veteran, businessman, and entrepreneur.