Raffensperger Announces Recovery of Funds In Settlement Against Unregistered Crypto Firm
Atlanta – Georgia Secretary of State Brad Raffensperger announced the settlement terms with digital asset financial services companies collectively known as “Nexo”. Nexo agreed to resolve claims regarding past unregistered offers and sales of securities to Georgia residents. The securities were in the form of interest-bearing digital asset deposit accounts called Earned Interest Products (EIP) accounts. Nexo will not offer or sell securities in the United States unless such sales have been registered or qualified under relevant laws. Currently, it is expected by all parties to this agreement that Nexo will cease operations in the United States, unless and until they have been properly vetted in accordance with the securities laws of the United States. Nexo will pay a total of $22,500,000.00 in fines to the 53 North American Securities Administrators Association (NASAA) member jurisdictions, or $424,528.30 per jurisdiction to resolve the violations.
Between June 17, 2020 and December 6, 2022, Nexo offered and sold EIP accounts in the United States to over 93,000 investors, totaling over $800,000,000.00. Georgia investors opened over 3,000 Nexo EIP accounts in an amount totaling over $45,000,000.00. Nexo’s agreement to enter into a settlement with the Georgia Secretary of State Securities Division comes after Nexo announced that they would phase out its products and services in the U.S. before April 1, 2023. Nexo will send written communications to customers, by February 1, 2023 that they should withdraw their assets from Nexo accounts before April 1 2023. Nexo will continue to assist customers that have EIP accounts, savings wallets, and n-collateral wallets, also known as “legacy accounts,” beyond the April withdrawal deadline. Customers will have access to their legacy accounts for the sole purpose of withdrawing and the accounts will not accrue interest.
“Our Securities Division worked tirelessly to bring greater accountability to firms operating in Georgia,” said Secretary Raffensperger. “This settlement sends a strong message. Anyone doing business here must abide by all applicable laws or there will be consequences.”
The Georgia Secretary of State Securities Division will continue to pursue enforcement actions against firms that fail to comply with state law. Firms that need to register and address any prior unregistered activity should contact their state and federal regulators. The Georgia Secretary of State Securities Division can be contacted at 470-312-2640.
The Georgia Secretary of State Securities Division would like to thank its fellow NASAA members, especially the multi-state jurisdiction working group for its coordinated efforts and the SEC for their collaboration and assistance.