On Monday, September 26, 2022, eight countries announced action against cryptocurrency lending platform Nexo Group in relation to unlisted interest-free cryptocurrency products.
Regulators in California, Kentucky, New York, Maryland, Oklahoma, South Carolina, Washington, and Vermont accused Nexo of providing interest income accounts without first registering customers as securities and providing the necessary disclosures.
Without access to these financial statements, state regulators argue that investors cannot make informed investment decisions.
The document also accuses Nexo of misrepresenting accounts and offering investors if Nexo is a licensed and registered platform.
The interest-generating feature, known as the interest accrual product, allows investors to deposit assets on Nexo and earn a return of up to 36% on their deposits.
However, Nexo said that only one asset earned a 36% interest rate and did not disclose that return in its marketing guarantee.
The company says some of its most popular assets, such as Bitcoin, generate returns at single-digit rates.
The campaign started this year as several recent cryptocurrency bankruptcies left investors with access to their funds.
Celsius, which offers accounts at the same interest rate, filed for bankruptcy this summer after freezing customer funds in June.
Since then, Voyager Digital has filed for bankruptcy under Chapter 11 of the Bankruptcy Act in July. The industry also suffered billions of dollars in losses in the weeks surrounding the Terra USD crypto boom and the failure of crypto hedge fund Three Arrows Capital.
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Previously, the US Securities and Exchange Commission (SEC) set up a special office to review crypto-related documents. Securities regulators underscore the need to provide stronger and more professional support for crypto assets.
The new office will join the agency’s seven existing offices to provide a focused overview of what the publisher has to offer. These offices are grouped by industry experience and are part of the Disclosure Program (DRP) department of the agency department.
The securities regulator said Monday (September 26, 2022), citing Bitcoin.com that “the Office of Crypto Assets will continue ongoing work on the entire DRP and will review documents containing crypto assets.”
Placing companies and governors in one office allows DRP to further focus its resources and expertise on solving the unique and evolving file review challenges associated with cryptographic assets.
Given the recent growth of the crypto market, Renee Jones, director of corporate finance at the SEC, explained that regulators recognize the need to provide greater and more specialized support to the crypto market.
“Through the establishment of this new office, DRP will enhance our focus on crypto assets, financial institutions, life sciences, industrial applications and services, and facilitate our ability to achieve our mission,” said Jones. .
Earlier, SEC Chairman Gary Gensler said that nearly 10,000 coins in the cryptocurrency market fall into the securities category. The offering and sale of these thousands of cryptographic security tokens is regulated by securities laws.
The US Securities and Exchange Commission (SEC) has sued two cryptocurrency advisory firms and their owners for embezzling funds from investors who pledged to invest in digital assets.
An indictment filed in Manhattan Federal District Court alleges that Creative Advancement LLC and Edelman Blockchain Advisors LLC, and their owner Gabriel Edelman, used “false and misleading statements” between February 2017 and four investors. securities. And May 2021.
According to the complaint, the statement contained a promise to invest in digital assets when Edelman actually used the money to cover personal expenses.
The complaint also accuses Edelman of engaging in “Ponzi-like” activities by sending several early settlement investors to encourage Edelman to invest more in the plan.
The SEC is awaiting a court order forcing the company to cease operations and forego profits from fraudulent transactions.
This is the second time SEC regulators have tracked bad actors in the crypto space. Last Wednesday, the U.S. Securities and Exchange Commission (SEC) sued the Chicago-based cryptocurrency company for selling $1.5 million in unregistered tokens and misleading investors about the nature of the sale.
The crackdown follows SEC President Gary Gensler’s statement, reiterating the SEC’s position that “the vast majority” of cryptocurrencies are securities and therefore fall under the SEC’s jurisdiction.